Lawrence: Welcome to The FED Weekly for 28 September - 4 October 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 primary factors affecting both current and retired personnel during this
critical week were the legislative failure to fund the government and the final,
sweeping effects of the administration's workforce realignment policies.
The week began with the looming threat of a government shutdown, with funding set to
expire late Tuesday evening, September 30.
The legislative battle came to a head when the Senate voted on the vehicle intended
to prevent the lapse in appropriations:
H.R.
5371, the Full-Year Continuing Appropriations and Extensions Act, 2025.
This Continuing Resolution, or CR, aimed to keep most federal programs funded
largely at the Fiscal Year 2024 levels for the remainder of Fiscal Year 2025.
However, on Tuesday, September 30, Senate Democrats rejected the measure,
ensuring the lapse in funding at midnight.
The vote of 55-45 fell short of the 60 votes required to overcome a
filibuster and pass the legislation.
The political impasse centered on health care.
Senate Democratic Leader Chuck Schumer stated that Democrats would
not accede to the bill unless it included an extension of expanded
Affordable Care Act (ACA) tax credits.
Republicans countered, calling the rejected bill a "clean" measure that
should have been noncontroversial, but the stalemate held.
This failure led directly to the Office of Management and Budget issuing a
memo instructing agencies to "execute their plans for an orderly shutdown".
The decision to allow the appropriations lapse to occur based on a conflict over
broad national health policy, specifically the extension of the ACA tax credits,
connects the fate of the federal workforce to large political battles over general
entitlement and subsidy programs.
The consequence is that federal employees and retirees, who rely on a functional
government for benefits and pay, become collateral damage in disputes that
extend far beyond the scope of government operations or appropriations alone.
The Great Exodus: The Deferred Resignation Program Culmination
Simultaneously, the civil service underwent the largest
single-year structural reduction since the Second World War.
The week culminated in the formal completion of the latest wave
of the Trump administration's Deferred Resignation Program (DRP).
More than 150,000 federal workers were formally set to quit on Tuesday,
September 30, in what was described as the âlargest mass resignation in U.S.
historyâ.
This mass departure forms a critical pillar of the administrationâs sweeping
effort to reduce the federal workforce, which is projected to result in the
departure of approximately 150,000 employees through DRP, voluntary
separation programs, attrition, and early retirement initiatives.
Employee reports cited months of "fear and intimidation" and a feeling of
having "no choice but to depart" after feeling that their agency's mission was
stripped away and job security dissolved.
The Deferred Resignation Program represents a massive financial
outlay by the government.
According to a Senate Democratsâ report from July, the total cost
of the program was set at $14.8
billion, covering the full salary and benefits for 150,000 workers
while they were on administrative leave for up to eight months.
The administration justified this significant one-time cost by claiming
it would lead to greater efficiency and lower long-term spending.
The Office of Personnel Management claimed the one-time expenses were
offset by lower longer-term spending, projecting annual savings of $28 billion.
Furthermore, OPM openly criticized the existing job protections for federal
civil servants, asserting that the government required a âmodern, at-will
employment framework like most employersâ.
This critique confirms that the administrative strategy is fundamentally
aimed at dismantling the protected status of the career civil service.
The decision to invest billions upfront to rapidly remove experienced
personnel illustrates that the political objective of restructuring the workforce
quickly outweighed the short-term financial efficiency of handling
separations through standard attrition.
This rapid, targeted removal is leading to an accelerated drain of institutional
knowledge, a systemic cost of lost expertise that is not quantified in
the projected annual savings of $28 billion but will inevitably impair the
efficacy of government functions relied upon by the public and by retirees.
The combined political rhetoric and administrative actions confirm that
the shutdown is being viewed not merely as a temporary operational pause but
rather as an opportunity to intensify and accelerate the permanent reduction
and restructuring of the civil service.
Legislative Focus on Benefits Integrity
Amidst the chaos of the shutdown and mass departures, attention remained
on legislation aimed at tightening the integrity of the Federal Employees Health
Benefits (FEHB) Program, which serves both current employees and retirees.
H.R.
2193: The FEHB Protection Act of 2025 , introduced in the House
of Representatives, proposes measures to improve accountability
within the FEHB program.
The Act mandates that the Director of the Office of Personnel Management
(OPM) establish new regulations for verifying qualifying life events that
permit an enrollee to add a family member to their health benefits plan.
The goal is explicitly to confirm that the individual being added
is a legitimate family member.
While this bill had no active movement reported during the period of September 28
to October 4, its relevance is significant because the FEHB program is the largest
employer-sponsored health benefits program of its kind, covering nearly 8.3
million enrollees and dependents, including a vast number of retirees.
Any legislation that strengthens the integrity and long-term
financial stability of this core benefit is crucial for both groups.
Issues That Affect Retired Federal Workers: For the community of
retired federal employees, the primary concerns during a lapse in
appropriations center on the security and timing of their monthly income
and the anticipation of cost-of-living adjustments for the coming year.
Annuity Security Amidst the Shutdown
The most important news for federal retirees during the turmoil of the October
1 government shutdown was the confirmation that their scheduled annuity payments
would continue without interruption.
Annuity payments for those under both the Civil Service Retirement System
(CSRS) and the Federal Employees Retirement System (FERS) are paid
from the Civil Service Retirement and Disability Trust Fund (CSRDF).
Since this funding source is categorized as mandatory spending and
does not rely on annual congressional appropriations, it is fiscally
insulated from a lapse in funding.
Furthermore, the Office of Personnel Management (OPM) staff required to
process and disburse these monthly payments are classified as excepted
employees and continue to work during the shutdown to maintain continuity.
Similarly, Social Security benefits, including retirement and disability
income, are paid from dedicated trust funds and are not impacted
by the appropriations lapse.
Therefore, while the active federal workforce faced an
immediate financial crisis due to furloughs, retirees maintained a
secure and reliable income stream.
This secure financial status for current annuitants stands in stark contrast to the
anxiety that drove a significant spike in retirement applications earlier in 2025.
Political rhetoric concerning changes to benefits, even if those cuts were
ultimately excluded from enacted legislation (such as the preservation of
the high-three salary calculation and the Special Retirement Supplement for FERS
retirees) , proved sufficient to push many employees into retiring prematurely.
This suggests that systemic instability, rather than immediate financial danger
to the annuity, is enough to cause the federal government to lose vital,
experienced human capital due to perceived uncertainty, even if the retirement
checks themselves remain secure.
Forecasting the 2026 Cost-of-Living Adjustment (COLA)
Retirees also tracked the forecast for the 2026 Cost-of-Living Adjustment,
which applies to Social Security benefits and FERS/CSRS annuities.
As of the end of the reporting period on October 4, analysts maintained a
strong consensus projection for the 2026 COLA to be approximately 2.7%.
This figure is derived from the latest available inflation data, specifically the
August 2025 Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
For an average retired worker, a 2.7%
increase would translate to an increase of about $54 per month, based on
average August 2025 benefit levels.
For those receiving Federal Employeesâ Compensation Act (FECA) benefits, the
2026 COLA projection is also 2.7%,
applicable to cases where the death or disability occurred more than one
year prior to the adjustment date.
While the projection is considered firm based on data through August 2025, the
final official COLA number depends on the release of the September CPI data, which
the Social Security Administration is scheduled to announce on October 15, 2025.
A significant underlying concern for retirees, even with stable annuities
and projected COLAs, remains the escalating cost of healthcare.
The political fight over health subsidies that triggered the shutdown occurs amidst
reports of significant premium increases in the general health insurance market.
This environment indicates that even with a guaranteed annuity, retirees
face massive cost pressures on their largest fixed expenseâhealthcare
premiumsâmagnifying the importance of maintaining the integrity and
affordability of the FEHB program.
Issues That Affect Current Federal Workers
For the active federal workforce, the seven days from September 28 to
October 4 brought an unparalleled combination of furloughs, administrative
chaos, and the explicit threat of mass, permanent job loss.
Furlough Execution and Workforce Prioritization
The government shutdown officially commenced on Wednesday, October
1, 2025, requiring agencies to implement their contingency plans.
The Trump administrationâs plan dictated the furlough of approximately
550,000 federal employees.
Critically, this figure represents only about 23% of the total federal workforce,
a remarkably low percentage compared to previous lapses in appropriations.
The Office of Personnel Management (OPM) guidance outlines three distinct
categories for employees during the lapse
: Â Furloughed Employees: These are "non-essential" personnel who are placed
on temporary, non-duty, non-pay status.
Excepted Employees: These personnel are deemed essential and must
continue working, as their duties are necessary under the legally permitted
exceptions to the Antideficiency Act.
They are required to work but may not be paid until Congress
acts to authorize retroactive pay following the end of the lapse.
Exempt Employees: These employees are unaffected by the shutdown because their
agency functions utilize funding from a source other than annual appropriations,
such as carryover or supplemental funding.
They continue to be paid normally.
The low 23% furlough rate is highly significant.
If less than one-quarter of the workforce is placed on temporary, unpaid leave,
it suggests that a much larger segment of the remaining 77% must be categorized
as either "excepted" (working without pay) or "exempt" (continuing to work).
This places an extraordinary burden on the active workforce already struggling
with months of turmoil and heightens political pressure on the definition
of legally necessary "excepted" duties.
Regarding payroll, federal civilian employees received their paychecks
for the September 7 through September 20 pay period on schedule, as
processing for that period was completed before the October 1 lapse.
However, pay covering the period of the shutdown itself is delayed
until congressional action authorizes funds and provides retroactive pay.
Mass Firings and the Reduction-in-Force (RIF) Strategy
The shutdown was immediately framed by the administration not as a temporary funding
dispute, but as an opportunity to push through permanent personnel reductions.
President Trump stated on Tuesday, September 30, that a shutdown could
include âcutting vast numbers of people out,â moving the focus from temporary
furlough to permanent termination.
Reports confirmed that the White House was instructing agencies to prepare
reduction-in-force (RIF) plans for mass firings during the possible lapse.
OPM issued specific guidance clarifying the relationship between the RIF
process and the lapse in appropriations.
A RIF is officially considered separate from the shutdown furlough
process, but the administration determined that the work necessary to
administer the RIF process, including required Human Resources and payroll
functions, is an excepted activity.
This critical administrative determination means that even as
non-essential government services cease, the machinery for permanent staffing
cutsâthe RIF processâis authorized to continue operating during the shutdown,
with designated personnel working without guaranteed immediate pay.
Agencies conducting RIFs must still issue the required 60-day notice to employees.
If a RIF notice is issued, the employee retains employment status
during that notice period, even if they are simultaneously placed on
furlough status during the lapse.
Should the shutdown end during the RIF notice period, the employee
would be entitled to retroactive pay.
Administrative Leave and Pay Directives
The convergence of the DRP mass resignation deadline and the shutdown
required immediate administrative action regarding leave status.
For those employees who were scheduled to be on administrative leave related
to DRP, RIF, or similar realignment purposes on or after October 1, the
employing agency was mandated to cancel that administrative leave.
Those personnel were immediately converted to standard furlough status
due to the lapse in appropriations.
This abrupt administrative shift confirms the immediate and overriding
power of the appropriations lapse.
While employees with a formal resignation date of September 30 were
successfully off-boarded, those whose administrative leave was scheduled
to continue past that date were moved to unpaid, non-work furlough.
This action nullifies pre-existing personnel agreements (administrative
leave) and transfers the financial burden of the shutdown onto
personnel who were technically awaiting separation or retirement.
Finally, in a directive relevant to agency leadership, the OPM issued a memorandum
on Thursday, October 2, 2025, confirming the continuation of the pay freeze for
certain Senior Political Officials.
OPM guidance advised agencies to maintain the frozen pay rate until
Congress passes new appropriations legislation that explicitly
addresses the status of the freeze.
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.
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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.