The United States Postal Service announced Wednesday that, faced with an ever-mounting debt, it would cease payment of employer’s contributions into the Federal Employees Retirement System for postal workers.

The move is being made to “conserve cash and preserve liquidity,” according to a press release issued by USPS.

The Postal Service currently expects an $8.3 billion deficit for this fiscal year. At a hearing in March, Postmaster General Patrick Donahoe said that, at that time, USPS will also “reach its statutory borrowing limit” at which point “the Postal Service will be forced to default on a financial obligation to the federal government, due at the close of the fiscal year on September 30, 2011.”

Postal Service officials have long insisted that that financial insolvency could be put off if USPS were given access to the surplus funds it has overpaid into FERS, which, it says, amounts to $6.9 billion.

The suspension of payments will be effective beginning Friday, and according to a USPS press release, will free up “about $800 million in the current fiscal year.”

USPS will still permit employees to contribute to FERS.

“We will continue to transmit to OPM employees’ contributions to FERS and also will continue to transmit employer automatic and matching contributions and employee contributions to the Thrift Savings Plan,” said Anthony Vegliante, chief human resources officer and executive vice president.

(Post office had $329 million loss in first quarter)

USPS listed several other steps that it felt Congress needed to take in order to keep the Postal Service afloat: “Eliminate the current mandates requiring retiree health benefit pre-payments;” “Allow the Postal Service to access Civil Service Retirement System and FERS overpayments;” and “Give the Postal Service the authority to determine the frequency of mail delivery.”

The House Oversight Committee, which has jurisdiction over the Postal Service, has made clear that it is unlikely to accept such reforms without accompanying structural changes.

(Incorrect Statue of Liberty printed on $880 million worth of stamps)

In a statement issued today, Oversight Committee Chairman Darrell Issa reiterated that stance.

“The United States Postal Service, our nation’s second largest employer, is now past the brink of insolvency,” he said. “This would not be tolerated in a private company. Incredibly, the unprecedented action to suspend these payments will only offer USPS an additional $800 million through the end of the year in liquidity, not even 10 percent of their projected deficit of $8.3 billion. USPS needs fundamental structural and financial reforms to cut costs and protect taxpayers from an expensive bailout.”