Lawrence: Welcome to The FED Weekly for 4-10 January 2026, your essential
weekly briefing on the policies and proposals shaping your career,
your benefits, and your retirement.
Whether youâre a current federal employee navigating changes in the civil service,
or a retiree keeping a close watch on your hard-earned pension and healthcare, this
is your source for the latest news from Capitol Hill and the executive branch.
Each week, we cut through the noise to bring you the critical updates on budget
negotiations, pay raises, workforce policies, and the legislative battles that
directly impact the federal community.
Let's get you up to speed on what happened this past week.
Issues That Affect Current and Retired Federal Workers
The primary legislative development this week concerns the Fiscal
Year 2026 appropriations cycle.
On 08 January 2026, the U.S.
House of Representatives passed H.R.
6938, a "minibus" appropriations package titled the "Commerce, Justice, Science;
Energy and Water Development; and Interior and Environment Appropriations Act, 2026."
The bill passed by a vote of 397 to 28.
This legislation consolidates funding for multiple federal departments,
including Commerce, Justice, Energy, Interior, the EPA, and NASA.
The bill explicitly rejects cuts proposed by the administration
in its budget request.
For instance, while the Presidentâs budget sought to reduce NASAâs funding to $18.8
billion, H.R.
6938 funds the agency at approximately $24.4
billion, maintaining levels roughly equal to Fiscal Year 2025.
Senator Patty Murray stated that the bill utilizes line-by-line spending
levels to assert congressional control and prevent the Office of Management
and Budget from impounding funds.
Following House passage, H.R.
6938 moved to the Senate on 09 January 2026.
Senate Majority Leader Chuck Schumer filed cloture on the motion to
proceed, scheduling a procedural vote for Monday, 12 January 2026.
While this bill addresses funding for a significant portion of the government,
other major departmentsâincluding Defense, Labor, and Health and
Human Servicesâremain funded by a Continuing Resolution that is
set to expire on 30 January 2026.
Turning to compensation, the 2026 federal pay rates were finalized
during this week, which serves as the last week of the 2025 pay cycle.
The new rates become effective on 11 January 2026.
Under the Presidentâs alternative pay plan, implemented by Executive
Order, most General Schedule employees will receive a 1.0
percent across-the-board increase to base pay.
Locality pay percentages remain frozen at 2025 levels.
An exception exists for federal law enforcement officers.
The administration authorized a special rate adjustment providing an additional
increase for Law Enforcement Officers to align their total pay raise with the 3.8
percent increase authorized for the military.
For the remainder of the civil service, the total increase remains capped at 1.0
percent.
Regarding workforce efficiency measures, the Public Employees for
Environmental Responsibility, or PEER, released an analysis on 09 January
2026 regarding the "Department of Government Efficiency," or DOGE.
The report alleges that the administrationâs strategy of placing
employees on paid administrative leave rather than utilizing formal
reduction-in-force procedures has resulted in financial losses.
PEER estimates that over 154,000 federal employeesâapproximately seven percent
of the civilian workforceâhave been placed on paid leave or similar statuses.
The report calculates the cost of compensating these employees for work not
performed at approximately $10 billion.
PEER noted that this occurs while agencies such as the National
Park Service remain understaffed.
Data released by the Office of Personnel Management on 08 January
2026 indicates that attrition across the federal government is rising.
Between January and November 2025, approximately 335,000
workers left federal service.
While layoffs accounted for approximately 11,000 of these
departures, the majority were voluntary resignations or retirements.
The Department of Education has lost approximately 40 percent of its staff,
and the Department of the Treasury is down approximately 4,000 tax examiners.
Issues That Affect Retired Federal Workers
Retirees under the Civil Service Retirement System,
or CSRS, are receiving a 2.8
percent increase.
This figure is based on the rise in the Consumer Price Index for
Urban Wage Earners and Clerical Workers from the third quarter of
2024 to the third quarter of 2025.
Retirees under the Federal Employees Retirement System,
or FERS, are receiving a 2.0
percent increase.
Under FERS regulations, if the CPI-W increase falls between 2.0
percent and 3.0
percent, the COLA is capped at 2.0
percent.
Regarding tax administration, the Office of Personnel Management announced a policy
change on 08 January 2026 concerning the delivery of tax form 1099-R.
Electronic delivery is now the default method for annuitants
with an email address on file.
OPM will not mail paper copies to these individuals unless they actively
opt out via the Retirement Services Online portal or the telephone hotline.
For annuitants who requested paper copies or do not have an email on
file, OPM scheduled mailings for the last week of January 2026.
Concurrent with this policy, OPM launched a new online tool on 08 January 2026.
This tool allows annuitants to download 1099-R forms using alternative
identity verification methods that do not require a full login to the
Retirement Services Online system.
In investment news, the Thrift Savings Plan, or TSP, reported updated
interest rates and new features.
The interest rate for the Government Securities Investment Fund,
the G Fund, increased to 4.250
percent for January 2026, up from 4.125
percent in December 2025.
Additionally, the TSP implemented a new policy in January 2026 allowing
for in-plan Roth conversions.
This feature permits participants to convert existing traditional,
pre-tax TSP balances to Roth, after-tax balances within the plan.
Participants must pay taxes on the converted amount in the
year the conversion occurs.
The National Active and Retired Federal Employees Association, or NARFE, announced
governance changes on 06 January 2026.
The association initiated a special referendum to amend its bylaws,
proposing to extend term limits for National Executive Board members
from two years to three years.
NARFE leadership stated this change aims to provide continuity during the current
period of government restructuring.
Voting for this referendum is scheduled to open later in January.
Issues That Affect Current Federal Workers
On 07 January 2026, OPM Director Scott Kupor issued a memorandum
titled "Guide to Telework and Remote Work in the Federal Government."
This guidance establishes a "starting presumption" that federal employees
will perform their entire bi-weekly work requirement at an agency worksite.
The document states that remote work is prohibited unless a
specific exemption applies.
Exceptions are limited to military spouses requiring relocation, specific reasonable
accommodations for disabilities, and limited cases for households where
both spouses are federal employees.
The guidance instructs agencies to verify that employees are
working full-time in-person.
Regarding the implementation of these policies for employees with disabilities,
reports published on 08 January 2026 indicate that some agencies are requiring
employees with existing reasonable accommodations to return to the office
or undergo new recertification processes.
OPM Director Kupor published a blog post defending the policy, stating
that remote work rates had risen from 3 percent pre-pandemic to 10
percent, and arguing that a reset was necessary to improve collaboration.
Union leadership responded to this guidance.
On 07 January 2026, AFGE National President Everett Kelley issued a
statement opposing the directive, citing the Telework Enhancement Act of 2010.
NTEU National President Doreen Greenwald stated that the union would enforce
existing Collective Bargaining Agreements that include telework protections.
In agency-specific news, the Federal Emergency Management
Agency, or FEMA, commenced workforce reductions during this period.
Leaked documents reported by major news outlets on 05 January 2026 outlined a plan
by the Department of Homeland Security to reduce FEMAâs "CORE" workforceâthe
Cadre of On-Call Response and Recovery.
The plan details a 41 percent reduction in CORE disaster roles,
equivalent to over 4,300 positions, and an 85 percent reduction in surge
staffing, approximately 6,500 roles.
Reports confirmed that terminations began on New Year's Eve and continued
through the week of 04 January 2026.
These reductions impacted FEMA Region 10 during active flooding
events in Washington state.
Legal actions regarding workforce reductions continued this week.
Unions including AFGE and NFFE are litigating against mass terminations
based on "Section 120" of the current Continuing Resolution.
This section prohibits agencies funded by the CR from
implementing reductions in force.
A preliminary injunction issued by Judge Susan Illston in December 2025
remained in effect through 10 January 2026, legally blocking the finalization
of specific termination notices at agencies covered by the Continuing
Resolution, such as the State Department.
And thatâs a wrap on this weekâs Federal Workforce Roundup.
The landscape for federal employees and retirees is constantly shifting,
with major decisions being made about everything from pay and job security
to retirement benefits and the very structure of the civil service.
Staying informed is your best tool.
Be sure to subscribe wherever you get your podcasts, so you never miss an update.
Thanks for tuning in.
Weâll be back next week to track the latest developments
and what they mean for you.
Until then, stay engaged and be well.