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Lawrence: Welcome to The FED Weekly
for 28 September - 4 October 2025, your

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essential weekly briefing on the policies
and proposals shaping your career,

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your benefits, and your retirement.

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Whether you’re a current federal employee
navigating changes in the civil service,

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or a retiree keeping a close watch on your
hard-earned pension and healthcare, this

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is your source for the latest news from
Capitol Hill and the executive branch.

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Each week, we cut through the noise to
bring you the critical updates on budget

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negotiations, pay raises, workforce
policies, and the legislative battles that

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directly impact the federal community.

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Let's get you up to speed on
what happened this past week.

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Issues That Affect Current
and Retired Federal Workers

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The primary factors affecting both
current and retired personnel during this

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critical week were the legislative failure
to fund the government and the final,

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sweeping effects of the administration's
workforce realignment policies.

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The week began with the looming threat of
a government shutdown, with funding set to

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expire late Tuesday evening, September 30.

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The legislative battle came to a head when
the Senate voted on the vehicle intended

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to prevent the lapse in appropriations:

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H.R.

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5371, the Full-Year Continuing
Appropriations and Extensions Act, 2025.

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This Continuing Resolution, or CR, aimed
to keep most federal programs funded

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largely at the Fiscal Year 2024 levels
for the remainder of Fiscal Year 2025.

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However, on Tuesday, September 30,
Senate Democrats rejected the measure,

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ensuring the lapse in funding at midnight.

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The vote of 55-45 fell short of
the 60 votes required to overcome a

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filibuster and pass the legislation.

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The political impasse
centered on health care.

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Senate Democratic Leader Chuck
Schumer stated that Democrats would

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not accede to the bill unless it
included an extension of expanded

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Affordable Care Act (ACA) tax credits.

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Republicans countered, calling the
rejected bill a "clean" measure that

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should have been noncontroversial,
but the stalemate held.

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This failure led directly to the Office
of Management and Budget issuing a

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memo instructing agencies to "execute
their plans for an orderly shutdown".

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The decision to allow the appropriations
lapse to occur based on a conflict over

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broad national health policy, specifically
the extension of the ACA tax credits,

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connects the fate of the federal workforce
to large political battles over general

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entitlement and subsidy programs.

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The consequence is that federal employees
and retirees, who rely on a functional

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government for benefits and pay, become
collateral damage in disputes that

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extend far beyond the scope of government
operations or appropriations alone.

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The Great Exodus: The Deferred
Resignation Program Culmination

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Simultaneously, the civil
service underwent the largest

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single-year structural reduction
since the Second World War.

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The week culminated in the formal
completion of the latest wave

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of the Trump administration's
Deferred Resignation Program (DRP).

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More than 150,000 federal workers
were formally set to quit on Tuesday,

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September 30, in what was described as
the “largest mass resignation in U.S.

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history”.

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This mass departure forms a critical
pillar of the administration’s sweeping

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effort to reduce the federal workforce,
which is projected to result in the

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departure of approximately 150,000
employees through DRP, voluntary

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separation programs, attrition,
and early retirement initiatives.

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Employee reports cited months of "fear
and intimidation" and a feeling of

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having "no choice but to depart" after
feeling that their agency's mission was

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stripped away and job security dissolved.

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The Deferred Resignation Program
represents a massive financial

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outlay by the government.

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According to a Senate Democrats’
report from July, the total cost

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of the program was set at $14.8

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billion, covering the full salary
and benefits for 150,000 workers

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while they were on administrative
leave for up to eight months.

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The administration justified this
significant one-time cost by claiming

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it would lead to greater efficiency
and lower long-term spending.

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The Office of Personnel Management
claimed the one-time expenses were

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offset by lower longer-term spending,
projecting annual savings of $28 billion.

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Furthermore, OPM openly criticized the
existing job protections for federal

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civil servants, asserting that the
government required a “modern, at-will

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employment framework like most employers”.

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This critique confirms that the
administrative strategy is fundamentally

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aimed at dismantling the protected
status of the career civil service.

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The decision to invest billions
upfront to rapidly remove experienced

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personnel illustrates that the political
objective of restructuring the workforce

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quickly outweighed the short-term
financial efficiency of handling

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separations through standard attrition.

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This rapid, targeted removal is leading
to an accelerated drain of institutional

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knowledge, a systemic cost of lost
expertise that is not quantified in

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the projected annual savings of $28
billion but will inevitably impair the

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efficacy of government functions relied
upon by the public and by retirees.

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The combined political rhetoric and
administrative actions confirm that

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the shutdown is being viewed not merely
as a temporary operational pause but

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rather as an opportunity to intensify
and accelerate the permanent reduction

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and restructuring of the civil service.

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Legislative Focus on Benefits Integrity

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Amidst the chaos of the shutdown and
mass departures, attention remained

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on legislation aimed at tightening the
integrity of the Federal Employees Health

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Benefits (FEHB) Program, which serves
both current employees and retirees.

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H.R.

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2193: The FEHB Protection Act of
2025 , introduced in the House

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of Representatives, proposes
measures to improve accountability

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within the FEHB program.

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The Act mandates that the Director
of the Office of Personnel Management

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(OPM) establish new regulations for
verifying qualifying life events that

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permit an enrollee to add a family
member to their health benefits plan.

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The goal is explicitly to confirm
that the individual being added

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is a legitimate family member.

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While this bill had no active movement
reported during the period of September 28

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to October 4, its relevance is significant
because the FEHB program is the largest

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employer-sponsored health benefits
program of its kind, covering nearly 8.3

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million enrollees and dependents,
including a vast number of retirees.

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Any legislation that strengthens
the integrity and long-term

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financial stability of this core
benefit is crucial for both groups.

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Issues That Affect Retired Federal
Workers:  For the community of

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retired federal employees, the
primary concerns during a lapse in

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appropriations center on the security
and timing of their monthly income

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and the anticipation of cost-of-living
adjustments for the coming year.

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Annuity Security Amidst the Shutdown

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The most important news for federal
retirees during the turmoil of the October

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1 government shutdown was the confirmation
that their scheduled annuity payments

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would continue without interruption.

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Annuity payments for those under both
the Civil Service Retirement System

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(CSRS) and the Federal Employees
Retirement System (FERS) are paid

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from the Civil Service Retirement
and Disability Trust Fund (CSRDF).

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Since this funding source is
categorized as mandatory spending and

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does not rely on annual congressional
appropriations, it is fiscally

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insulated from a lapse in funding.

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Furthermore, the Office of Personnel
Management (OPM) staff required to

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process and disburse these monthly
payments are classified as excepted

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employees and continue to work during
the shutdown to maintain continuity.

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Similarly, Social Security benefits,
including retirement and disability

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income, are paid from dedicated
trust funds and are not impacted

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by the appropriations lapse.

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Therefore, while the active
federal workforce faced an

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immediate financial crisis due to
furloughs, retirees maintained a

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secure and reliable income stream.

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This secure financial status for current
annuitants stands in stark contrast to the

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anxiety that drove a significant spike in
retirement applications earlier in 2025.

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Political rhetoric concerning changes
to benefits, even if those cuts were

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ultimately excluded from enacted
legislation (such as the preservation of

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the high-three salary calculation and the
Special Retirement Supplement for FERS

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retirees) , proved sufficient to push
many employees into retiring prematurely.

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This suggests that systemic instability,
rather than immediate financial danger

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to the annuity, is enough to cause
the federal government to lose vital,

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experienced human capital due to perceived
uncertainty, even if the retirement

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checks themselves remain secure.

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Forecasting the 2026
Cost-of-Living Adjustment (COLA)

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Retirees also tracked the forecast for
the 2026 Cost-of-Living Adjustment,

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which applies to Social Security
benefits and FERS/CSRS annuities.

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As of the end of the reporting period
on October 4, analysts maintained a

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strong consensus projection for the
2026 COLA to be approximately 2.7%.

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This figure is derived from the latest
available inflation data, specifically the

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August 2025 Consumer Price Index for Urban
Wage Earners and Clerical Workers (CPI-W).

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For an average retired worker, a 2.7%

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increase would translate to an increase
of about $54 per month, based on

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average August 2025 benefit levels.

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For those receiving Federal Employees’
Compensation Act (FECA) benefits, the

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2026 COLA projection is also 2.7%,

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applicable to cases where the death
or disability occurred more than one

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year prior to the adjustment date.

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While the projection is considered firm
based on data through August 2025, the

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final official COLA number depends on the
release of the September CPI data, which

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the Social Security Administration is
scheduled to announce on October 15, 2025.

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A significant underlying concern for
retirees, even with stable annuities

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and projected COLAs, remains the
escalating cost of healthcare.

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The political fight over health subsidies
that triggered the shutdown occurs amidst

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reports of significant premium increases
in the general health insurance market.

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This environment indicates that even
with a guaranteed annuity, retirees

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face massive cost pressures on their
largest fixed expense—healthcare

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premiums—magnifying the importance
of maintaining the integrity and

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affordability of the FEHB program.

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Issues That Affect Current Federal Workers

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For the active federal workforce,
the seven days from September 28 to

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October 4 brought an unparalleled
combination of furloughs, administrative

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chaos, and the explicit threat
of mass, permanent job loss.

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Furlough Execution and
Workforce Prioritization

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The government shutdown officially
commenced on Wednesday, October

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1, 2025, requiring agencies to
implement their contingency plans.

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The Trump administration’s plan
dictated the furlough of approximately

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550,000 federal employees.

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Critically, this figure represents only
about 23% of the total federal workforce,

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a remarkably low percentage compared
to previous lapses in appropriations.

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The Office of Personnel Management
(OPM) guidance outlines three distinct

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categories for employees during the lapse

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:    Furloughed Employees: These are
"non-essential" personnel who are placed

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on temporary, non-duty, non-pay status.

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Excepted Employees: These personnel
are deemed essential and must

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continue working, as their duties are
necessary under the legally permitted

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exceptions to the Antideficiency Act.

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They are required to work but
may not be paid until Congress

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acts to authorize retroactive pay
following the end of the lapse.

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Exempt Employees: These employees are
unaffected by the shutdown because their

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agency functions utilize funding from a
source other than annual appropriations,

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such as carryover or supplemental funding.

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They continue to be paid normally.

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The low 23% furlough rate
is highly significant.

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If less than one-quarter of the workforce
is placed on temporary, unpaid leave,

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it suggests that a much larger segment
of the remaining 77% must be categorized

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as either "excepted" (working without
pay) or "exempt" (continuing to work).

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This places an extraordinary burden on
the active workforce already struggling

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with months of turmoil and heightens
political pressure on the definition

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of legally necessary "excepted" duties.

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Regarding payroll, federal civilian
employees received their paychecks

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for the September 7 through September
20 pay period on schedule, as

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processing for that period was
completed before the October 1 lapse.

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However, pay covering the period
of the shutdown itself is delayed

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until congressional action authorizes
funds and provides retroactive pay.

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Mass Firings and the
Reduction-in-Force (RIF) Strategy

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The shutdown was immediately framed by the
administration not as a temporary funding

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dispute, but as an opportunity to push
through permanent personnel reductions.

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President Trump stated on Tuesday,
September 30, that a shutdown could

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include “cutting vast numbers of people
out,” moving the focus from temporary

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furlough to permanent termination.

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Reports confirmed that the White House
was instructing agencies to prepare

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reduction-in-force (RIF) plans for
mass firings during the possible lapse.

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OPM issued specific guidance clarifying
the relationship between the RIF

00:14:31.402 --> 00:14:34.042
process and the lapse in appropriations.

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A RIF is officially considered
separate from the shutdown furlough

00:14:38.141 --> 00:14:42.641
process, but the administration
determined that the work necessary to

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administer the RIF process, including
required Human Resources and payroll

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functions, is an excepted activity.

00:14:50.234 --> 00:14:54.124
This critical administrative
determination means that even as

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non-essential government services cease,
the machinery for permanent staffing

00:14:58.673 --> 00:15:03.984
cuts—the RIF process—is authorized to
continue operating during the shutdown,

00:15:04.263 --> 00:15:07.993
with designated personnel working
without guaranteed immediate pay.

00:15:08.774 --> 00:15:13.704
Agencies conducting RIFs must still issue
the required 60-day notice to employees.

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If a RIF notice is issued, the
employee retains employment status

00:15:18.194 --> 00:15:21.573
during that notice period, even if
they are simultaneously placed on

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furlough status during the lapse.

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Should the shutdown end during the
RIF notice period, the employee

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would be entitled to retroactive pay.

00:15:31.270 --> 00:15:33.640
Administrative Leave and Pay Directives

00:15:34.221 --> 00:15:38.382
The convergence of the DRP mass
resignation deadline and the shutdown

00:15:38.382 --> 00:15:42.072
required immediate administrative
action regarding leave status.

00:15:42.692 --> 00:15:46.301
For those employees who were scheduled
to be on administrative leave related

00:15:46.301 --> 00:15:52.642
to DRP, RIF, or similar realignment
purposes on or after October 1, the

00:15:52.642 --> 00:15:56.452
employing agency was mandated to
cancel that administrative leave.

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Those personnel were immediately
converted to standard furlough status

00:16:01.171 --> 00:16:03.161
due to the lapse in appropriations.

00:16:03.806 --> 00:16:08.426
This abrupt administrative shift
confirms the immediate and overriding

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power of the appropriations lapse.

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While employees with a formal
resignation date of September 30 were

00:16:15.325 --> 00:16:19.195
successfully off-boarded, those whose
administrative leave was scheduled

00:16:19.195 --> 00:16:23.516
to continue past that date were
moved to unpaid, non-work furlough.

00:16:24.026 --> 00:16:28.325
This action nullifies pre-existing
personnel agreements (administrative

00:16:28.325 --> 00:16:32.116
leave) and transfers the financial
burden of the shutdown onto

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personnel who were technically
awaiting separation or retirement.

00:16:36.890 --> 00:16:42.019
Finally, in a directive relevant to agency
leadership, the OPM issued a memorandum

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on Thursday, October 2, 2025, confirming
the continuation of the pay freeze for

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certain Senior Political Officials.

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OPM guidance advised agencies to
maintain the frozen pay rate until

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Congress passes new appropriations
legislation that explicitly

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addresses the status of the freeze.

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And that’s a wrap on this week’s
Federal Workforce Roundup.

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The landscape for federal employees
and retirees is constantly shifting,

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with major decisions being made about
everything from pay and job security

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to retirement benefits and the very
structure of the civil service.

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Staying informed is your best tool.

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Be sure to subscribe wherever you get your
podcasts, so you never miss an update.

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Thanks for tuning in.

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We’ll be back next week to
track the latest developments

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and what they mean for you.

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Until then, stay engaged and be well.