Lawrence: Welcome to The FED Weekly for 14 - 20 September 2025, 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 Looming Government Shutdown: A Standoff in Washington
The most significant news story for the entire federal workforce
this week is the intensifying threat of a government shutdown.
As the September 30, 2025, deadline for agency funding rapidly
approaches, Congress remains far from reaching a final agreement on
most full-year appropriations bills.
This has created a widespread sense of anxiety among federal employees across
the nation, who are now adjusting their personal and professional
lives to prepare for the potential disruption to their public service
and the threat to their paychecks.
Instead of a long-term solution, Republicans and Democrats are locked
in a standoff over competing versions of a short-term funding bill,
known as a continuing resolution.
On September 16, 2025, House Republicans put forward a seven-week stopgap
measure that would keep federal agencies open through November 21, 2025.
This bill was described as "clean" and free of "poison pills" but was notably
drafted and introduced without negotiation with their Democratic colleagues.
In contrast, the Trump administration is calling for a longer, four-month
continuing resolution that would extend funding through January 31, 2026.
The fundamental disagreement here is not just about the length of the
funding bill but about strategic timing.
The recurring cycle of brinkmanship in Washington reveals a deep partisan
divide where legislative efforts are often a high-stakes gamble.
The Republican proposal for a shorter, seven-week measure could be a tactic
to maintain leverage and force a quick resolution before the end of
the year, while the administrationâs and Democratsâ call for a longer
resolution may be a strategy to push the deadline past the new year and avoid
negotiations in the pressure-cooker environment of the late fall.
This constant uncertainty erodes the stability of the federal workforce,
creating a climate of recurring anxiety that can have a long-term
psychological toll on federal employees.
While a government shutdown directly impacts the pay and duties of current
employees, its effects can also ripple into the retiree community.
Although retirement annuity payments are generally protected, a prolonged
shutdown could delay administrative functions at agencies like the Office of
Personnel Management (OPM), potentially impacting the processing of new
retirement applications or delaying service requests for current annuitants.
A Proposed 2026 Pay Raise with a Catch
In a development that will impact the financial well-being of both
current employees and future retirees, President Trump issued an alternative
pay plan for 2026 on August 31, 2025.
This proposal would give the vast majority of federal employees a 1% pay
increase, with locality pay frozen.
However, the plan is not uniform.
A significant and targeted exception has been made for
certain federal law enforcement officers, who could receive a 3.8%
base pay increase to align with expected military raises.
The Office of Personnel Management has been tasked with determining
which specific categories of federal law enforcement employees
will receive this larger increase.
This proposal arrives at a time when several law enforcement agencies are
planning to surge hiring, particularly for immigration enforcement.
This segmented pay plan reveals a strategic prioritization of specific
roles within the federal government, which could create a potential for
internal division and morale issues.
The vast majority of the workforce would receive a significantly
smaller pay increase than a select group of their colleagues.
For current employees, this directly impacts their take-home pay.
For retired federal workers, this issue has a lasting effect because
retirement annuities for both the Federal Employees Retirement System
(FERS) and the Civil Service Retirement System (CSRS) are calculated based on
an employeeâs "high-3" average salary.
A smaller-than-expected pay increase in 2026 directly suppresses this average,
leading to a smaller annuity for those who retire in the years to come.
OPMâs Annual Combined Federal Campaign and a Hint of Its End
The Office of Personnel Management (OPM) has officially launched its
annual Combined Federal Campaign (CFC), which is scheduled to run from
October 1 through December 31, 2025.
The CFC is a charitable giving program that has been a long-standing
tradition within the federal government for more than six decades.
However, a key detail emerged on September 16, 2025, when a report in
FEDweek noted that OPM hinted that this might be the final year the
government conducts the charity drive.
The potential end of this program signifies a broader trend of evaluating
and potentially dismantling long-standing federal programs and traditions.
For a workforce and retiree community that values a sense of stability
and institutional legacy, this hint of a change represents a subtle
but significant signal of a new approach to government operations.
It can be seen as part of a larger, ongoing effort to reshape the culture and
function of the federal government itself.
Issues That Affect Retired Federal Workers
Thrift Savings Plan Performance: An August Rebound
For those who rely on the Thrift Savings Plan (TSP) for their
retirement income, there is positive news to report from August 2025.
All TSP funds finished the month in the black, with international investments (the
I Fund) in particular rebounding after lagging behind other portfolios in July.
This follows a mixed performance in July, when domestic investments in
the C and S Funds posted gains while the international (I) and fixed income
(F) funds ended the month in the red.
This recent mixed performance underscores the critical importance of
a diversified investment strategy for retirees and those nearing retirement.
The volatility of international markets, as seen in the I Fund's
up-and-down performance from July to August, highlights a major risk for
retirees whose ability to recover from market downturns is limited.
This latest data shows that retirement planning isn't a one-time
event but a continuous process of monitoring and adjustment, especially
in a dynamic economic climate.
These trends highlight the value of looking beyond U.S.
stocks, as international markets may offer better risk-adjusted returns and a
way to add stability to a portfolio that has become highly concentrated in U.S.
technology companies.
Maximizing Your Retirement: A Guide to Timing Your Exit
A crucial resource for those planning their retirement in
2026 was published this week.
Tammy Flanagan, an expert on federal benefits, released her annual guide
titled "Step into retirement on the right day" on September 18, 2025.
This guide provides vital information to help employees maximize their retirement
benefits and navigate the complex process of separation from federal service.
One of the most important pieces of advice is to time your retirement
date to maximize the lump-sum payment for your accrued annual leave.
For most federal employees, the 2026 leave year begins on January 11, 2026,
and concludes on January 9, 2027.
By retiring near the end of the leave year, an employee can ensure
they receive payment for the maximum amount of leave carried over from
the previous year, in addition to the leave accrued in the current year.
The guide also emphasizes the importance of the application process itself.
It is recommended that employees notify their Human Resources specialist
at least 30 to 90 days in advance of their planned work stoppage.
This provides enough time to complete the Online Retirement Application
(ORA), which must be finalized by the employee, the Human Resources
office, and the payroll provider before it is sent to OPM for processing.
The guide warns that retirement processing can take several months if
the employee has certain complicating factors, such as court orders, workers'
compensation claims, or a history of part-time or intermittent federal service.
The fact that an entire guide is dedicated to this topic and mentions
specific dates and deadlines reveals the bureaucratic intricacies of
the federal retirement process.
A single mistake, such as retiring on the wrong day, could cost an
employee a significant amount of money in lost leave and benefits.
Issues That Affect Current Federal Workers
Efforts to Restore Collective Bargaining Rights
For current federal workers, a new legislative effort is underway to
safeguard their job protections.
On September 18, 2025, Virginia Senator Mark Warner introduced the "Protect
America's Workforce Act," a bill backed by the American Federation of State,
County and Municipal Employees (AFSCME).
This legislation is a direct response to a fundamental challenge to labor
rights within the federal government.
The bill aims to block President Donald Trump's March executive
order, which stripped collective bargaining rights from hundreds
of thousands of federal employees.
According to AFSCME President Lee Saunders, the bill would allow federal
workers to regain their voice on the job and collectively bargain for safe working
conditions and strong public services.
This bill has bipartisan support and is a companion measure to a
bill introduced in the House by Maine Representative Jared Golden.
The legislative action is not just a partisan issue but a broader debate
about the nature of civil service and the rights of the federal workforce.
The use of strong language by the bill's sponsors, who describe
the administration's actions as "terrorizing the federal workforce,"
suggests a highly contentious environment where job protections
are actively being fought over.
The Legal Battle Over Federal Job Protections
The debate over federal employee rights is not limited to Congress.
A profound legal challenge is currently being waged by the Justice
Department, which is arguing before the Merit Systems Protection Board
(MSPB) that the President has the constitutional authority to fire federal
employees "at will" and without cause.
This legal argument directly challenges decades of precedent and current
federal law, which require agencies to provide notice, cause, and an
opportunity to rebut allegations before a firing can take place.
The administrationâs aggressive dismissal of career staff, including the top pardon
attorney in March 2025, demonstrates that this is not a theoretical argument but an
active strategy to reshape the workforce.
If the administration were to succeed in this legal effort, it could effectively
dismantle the protections that have insulated career civil servants from
political retribution for decades.
This would fundamentally alter the federal workforce, potentially
replacing a merit-based system with one where employment is
contingent on political loyalty.
The ongoing legal battles on multiple fronts highlight a multifaceted campaign
by the administration to redefine the nature of federal employment.
VERA and Deferred Resignation: A Looming Deadline
For a select group of current federal employees, a time-sensitive
deadline is rapidly approaching.
The deadline for the deferred resignation offer and the Voluntary Early Retirement
Authority (VERA) is September 30, 2025.
This program is available to employees who are eligible for the offer and
are at least age 50 with 20 years of creditable federal service, or any age
with 25 years of creditable service.
The program offers a unique window of opportunity for
those considering retirement.
A critical provision allows eligible employees to accept a
deferred resignation and still elect for early or normal retirement
before the September 30 deadline.
If a retirement election is made, it will override the deferred resignation.
During the deferred resignation period, employees will continue
to accrue retirement benefits.
For those who are scheduled to retire after September 30 but before December
31, 2025, they are still eligible for the program, and their deferred
resignation date can be extended to match their approved retirement date.
This news serves as a direct call to action for any federal employee
considering retirement, underscoring the need to act swiftly and navigate
the bureaucratic process with precision.
A separate retirement application must still be submitted, and it is important
to note that an employing agency can deny a request to rescind a resignation,
as the program's objective is to quickly consolidate or reassign roles.
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.