Lawrence: Welcome to The FED Weekly for 12-18 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 Deepening Financial Crisis and Back Pay Uncertainty
The lapse in annual appropriations, which began on October 1, 2025, pushed
the federal workforce past a critical financial threshold during this period.
For hundreds of thousands of civilian federal employees, the failure of Congress
and the President to resolve the funding impasse resulted in the first full missed
paychecks around October 15, covering the pay period that ended on October 18.
This financial shock affects two distinct groups: the estimated 700,000
or more employees who have been officially furloughed, and the nearly
equal number of "excepted" personnel, who are required to work without
compensation during the shutdown.
The stress on federal families has intensified, with union leaders
claiming workers are being "held hostage by a political dispute".
This period also saw significant uncertainty
surrounding guaranteed back pay.
Although receiving back pay after a shutdown has been a long-standing
practice, President Donald Trump suggested on Tuesday of this week
that furloughed employees would not necessarily receive this benefit.
The administration later issued guidance suggesting that only
excepted employees working without pay were guaranteed back pay.
This threat, widely seen as a strong-arm negotiating tactic, created
substantial unease and panic throughout the workforce, as employees already
facing the loss of an entire paycheck confronted the possibility that their
lost income might never be recovered.
An acute disparity arose regarding pay for military personnel.
Active-duty service members were facing the prospect of
missing a paycheck on October 15.
To mitigate this potential political pressure point, President Trump
directed the Pentagon to repurpose approximately $8 billion in military
research and development funds to ensure active-duty troops received
payment for up to two pay periods.
This executive maneuver temporarily removed one major element of financial
pressure from the budget negotiations, although it simultaneously drew
criticism and legal scrutiny concerning the Executive Branch's authority to
unilaterally divert congressionally appropriated funds from one
purpose (R&D) to another (payroll).
The decision to secure military pay while civilian workers faced threats to their
back pay amplified the perception that the financial distress of the civilian
workforce was being deliberately utilized as leverage to push political demands.
Shocking Increase in 2026 Health Benefits Premiums and Open Season
A major announcement from the Office of Personnel Management (OPM) this
week delivered a severe financial blow to both current and retired federal
employees: the details of the 2026 Federal Employees Health Benefits (FEHB) program.
OPM announced on October 9, 2025, that the average enrollee share
of premiums under the FEHB program will increase sharply by 12.3%
for the 2026 plan year.
This increase marks the second consecutive year of double-digit premium hikes, a
trend that federal employee advocacy groups, such as the National Active and
Retired Federal Employees Association (NARFE), have decried as unsustainable.
This announcement is particularly impactful because it occurred
while current employees are facing financial ruin due to the shutdown.
Employees currently navigating the stress of missed paychecks must soon
begin comparing coverage options during the 2025 Federal Benefits Open Season,
scheduled to run from November 10 through December 8, 2025, knowing they
must budget for significantly higher healthcare costs in the coming year.
Furthermore, the new plan year brings instability in carrier options.
For 2026, six plans, offering a total of eight options, will be dropping
out of the FEHB program, including the NALC Health Benefit Plan Standard and
High options, and various options from carriers such as Health Alliance HMO,
AvMed Health Plan, Independent Health, and Blue Care Network of Michigan.
This forces thousands of employees and annuitants to select a new plan
during Open Season, compounding the financial stress with
complex administrative choices.
Thrift Savings Plan Stability and Financial Relief Legislation
Amidst the economic turmoil, the Thrift Savings Plan (TSP) provided
crucial stability and operational reassurance to its participants.
The TSP confirmed that, despite the ongoing lapse in appropriations, it
continues its normal daily operations.
For active participants who have outstanding TSP loans and have been
placed in a non-pay status due to the shutdown, the TSP proactively
stated it will automatically update the employee's status.
This ensures that the participantâs loan remains in good standing, thus preventing
a default that could incur substantial tax penalties, even if scheduled repayments
are missed during the funding lapse.
In Congress, several bills were introduced or advanced to protect
federal workers from the financial collateral damage of the shutdown.
Congressman Suhas Subramanyam, along with co-sponsors, introduced the Shutdown
Guidance for Financial Institutions Act.
This bill aims to shield furloughed and excepted employees from losing
access to credit and suffering negative consequences on their credit scores
due to temporary payment difficulties.
It mandates federal financial regulators, such as the Federal Reserve and the
Consumer Financial Protection Bureau, to issue guidance encouraging institutions
to offer relief, such as loan modification or new credit extensions, and requiring
them to prevent adverse credit reporting related to shutdown hardship.
A related measure co-sponsored by Congressman Subramanyam is the Emergency
Relief for Federal Workers Act, which would allow federal workers to make
penalty-free withdrawals from their retirement accounts during a shutdown.
These legislative proposals collectively underscore the critical need for systemic
protections when the governmentâs failure to fund itself places the financial
security of its workers at risk.
Issues That Affect Retired Federal Workers
Delayed COLA Announcement and the FERS Penalty
The government shutdown caused a direct logistical delay in the calculation and
announcement of the 2026 Cost-of-Living Adjustment (COLA), affecting all federal
annuitants and Social Security recipients.
The annual COLA calculation relies on the release of the September Consumer
Price Index for Urban Wage Earners and Clerical Workers (CPI-W) data by
the Bureau of Labor Statistics (BLS).
The CPI release, originally scheduled for Wednesday, October 15, 2025, was postponed
due to the funding lapse, effectively delaying the final COLA announcement.
The Social Security Administration (SSA) confirmed on October 14, 2025,
that the COLA announcement would be delayed until the BLS releases the
September CPI figures, now rescheduled for Friday, October 24, 2025.
While officially delayed, projections based on inflation data through
August 2025 anticipate the 2026 COLA will be approximately 2.7%.
This delay forces retirees to budget for 2026 based on two highly
uncertain figures: an official COLA rate that has not yet been confirmed,
and a confirmed, staggering 12.3%
average increase in their FEHB premiums.
The postponement of the COLA, while only nine days, creates immediate financial
planning difficulties for those on fixed incomes who require the precise rate to
assess their purchasing power against rising costs, especially healthcare.
The period also provided a reminder of the permanent legislative
disadvantage faced by Federal Employees Retirement System (FERS) annuitants.
The current law dictates that when the inflation rate (CPI-W) falls between 2.01%
and 3.0%,
FERS retirees receive a capped increase of only 2.0%,
which is lower than the full increase received by Civil Service
Retirement System (CSRS) retirees and Social Security beneficiaries.
For the 2025 COLA, FERS retirees received 2.0%,
compared to the 2.5%
applied to CSRS and Social Security.
This structural difference leads to a continuous, compounding erosion of
FERS retirement benefits over time, motivating support for legislation
such as the Equal COLA Act (H.R.
866 and S.
3194) aimed at eliminating this penalty.
The OPM Retirement Processing Crisis
The retirement system for federal employees is currently facing
an unprecedented crisis of capacity, amplified significantly
by the ongoing shutdown.
This crisis stems from the historic mass exodus of the federal workforce,
driven by a combination of standard retirements, buyouts, and the
Deferred Resignation Program (DRP).
Leading up to the end of Fiscal Year 2025 (September 30), the federal
government experienced a massive wave of departures, including approximately
154,000 employees who accepted buyout offers and were removed from the payroll,
alongside an 18% surge in regular retirements compared to the previous
year, totaling nearly 105,000 annuitants.
Many of the 60,000 workers who retired via the DRP are among those
currently awaiting their benefits.
This volume has overwhelmed the Office of Personnel Management (OPM), which
handles final annuity processing.
As of mid-October 2025, OPM is grappling with a backlog of over 35,000 unprocessed
retirement claims, resulting in average processing times stretching to 76 days.
The fundamental problem is that the wave of mass departures was not
matched by administrative capacity.
The government's push for rapid workforce reduction effectively
dismantled the administrative infrastructureâboth at OPM and in
agency Human Resources officesânecessary to administer the benefits owed
to those departing employees.
The operational complexities of the shutdown have worsened this problem.
OPM workers responsible for handling paperwork and
payroll have been furloughed.
Furthermore, final retirement applications cannot be processed
until the separating agency issues the employeeâs final paycheck, a step
that is itself disrupted by the agency furloughs imposed by the shutdown.
This bureaucratic logjam leaves thousands of recent retirees in financial limbo,
receiving only interim annuity payments or waiting for the FERS Annuity Supplement
to begin after case finalization.
OPM Director Scott Kupor acknowledged the crisis, characterizing the legacy
paper-based retirement process, centered at the Retirement Operations Center
in Boyers, Pennsylvania, as archaic.
Kupor stated he remains optimistic and is pursuing modernization efforts, including
mandating the use of the new Online Retirement Application (ORA) system, which
provides OPM early visibility into the projected 60,000 claims in the pipeline.
Additionally, OPM is coordinating with other agencies to detail HR staff to OPM
to assist with the overwhelming workload.
Legislation to Enhance Retirement Creditable Service
For employees approaching retirement, the Federal Retirement Fairness Act (H.R.
1522) remains a vital piece of pending legislation.
This bill proposes to amend Title 5 of the U.S.
Code to allow civilian service performed in a temporary position after
December 31, 1988, to be counted as creditable service under the Federal
Employees Retirement System (FERS).
If enacted, this measure would allow thousands of employees to buy back
time previously deemed non-creditable, potentially increasing their
retirement annuity calculation and accelerating their eligibility date.
Issues That Affect Current Federal Workers
Implementation of Targeted Mass Layoffs (RIFs)
The defining event for current federal workers during this week was the beginning
of mass, permanent layoffs across the civil service, implemented under the
guise of the ongoing funding lapse.
The administration had utilized the lack of appropriations to execute planned
workforce elimination, targeting programs inconsistent with the Presidentâs agenda.
On Friday, October 10, 2025 (just preceding the start of this reporting
period), White House Office of Management and Budget (OMB) Director Russell
Vought announced that Reductions in Force (RIFs) were officially underway.
These layoffs are highly strategic, directed specifically at programs and
activities that satisfy three conditions: discretionary funding lapses on October
1, 2025; no other funding source is available; and the program is inconsistent
with the Presidentâs priorities.
OMB Director Vought was quoted as saying that the targeted programs "are never
going to come back, in many cases".
Reports by October 14, 2025, confirmed that RIF notices had
been issued to approximately 4,200 federal employees across seven
agencies in the initial phase.
The agencies facing the deepest immediate cuts included the Treasury Department,
which issued RIF notices to 1,446 employees, and the Department of Health
and Human Services (HHS), which targeted between 1,100 and 1,200 employees.
Other agencies included the Department of Education (466 employees), Department
of Housing and Urban Development (442 employees), Commerce Department (315
employees), Energy Department (187 employees), and the Department of
Homeland Security (176 employees).
However, in a confusing development, 700 firings issued to staff at the
Centers for Disease Control and Prevention (CDC) were abruptly reversed
over the weekend of October 12â13.
Procedural Chaos and Administrative Cruelty
The process of issuing these RIF notices during the shutdown created
widespread administrative chaos and intensified employee distress.
Employees who had been furloughedâwhich applies to most personnel in departments
like Educationâwere unable to access their official government email accounts.
Since RIF notices were sent to these inaccessible official emails, employees
at the Department of Education reported being "in a panic" because they had no
way to confirm if they had been fired.
They were forced to seek permission to check their accounts or rely
on communication from "excepted" co-workers who retained access.
This communication failure during a high-stakes personnel action
exacerbated the already severe anxiety gripping the workforce, which had
endured months of reductions and threats leading up to the shutdown.
The timing of the firings was also heavily criticized, with one employee
noting the RIFs in the special education program office were conducted the
day before the funeral of a longtime division director, underscoring the
perceived lack of consideration for the human impact of the downsizing.
Executive Order 14356: Restructuring Federal Hiring and Accountability
In a move cementing the administrationâs structural control over the workforce,
President Trump signed Executive Order 14356, "Ensuring Continued Accountability
in Federal Hiring," on October 15, 2025.
This order fundamentally restructures how the government hires career
employees, extending political oversight over personnel decisions far
beyond the immediate shutdown crisis.
The order imposes a strict constraint, stipulating that no vacant civilian
position may be filled, and no new position may be created, except as
explicitly provided for in the order.
This mandate effectively institutionalizes an indefinite hiring freeze,
requiring every agency to justify the necessity of filling any position.
The primary mechanism for this control is the mandated establishment of
a Strategic Hiring Committee (SHC) within 30 days of the orderâs issuance.
These committees are composed of senior agency leadership, including
the deputy agency head and the chief of staffâpositions typically
held by political appointees.
The SHC is tasked with approving the creation or filling of
each vacancy within the agency.
Crucially, the SHC must ensure that agency hiring is consistent with "the
national interest, agency needs, and the priorities of my Administration".
Agencies are also required to create Annual Staffing Plans, which will be
monitored quarterly by OPM and OMB.
The incorporation of "Administration priorities" as a mandatory criterion
for approving career civil service vacancies moves the hiring process
away from traditionally non-partisan, merit-based selection and centralizes
political control over the composition of the career workforce.
This directive is seen by critics as a long-term mechanism to ensure that
the federal bureaucracy is staffed by individuals aligned with the incumbent
political agenda, regardless of the agency's specific mission requirements.
Pending Congressional Relief for Active Employees
To directly counter the threats facing current federal workers, specific
legislation remains pending in Congress.
The Securing Assurance for Federal Employees (SAFE) Act was introduced to
explicitly prohibit the administration from conducting Reductions in Force
(RIFs) during a government shutdown.
Its passage would prevent the weaponization of funding
lapses as a mechanism for permanent workforce reductions.
Additionally, in response to the operational burden imposed
by the shutdown, Representative Ilhan Omar introduced H.R.
5720, which aims to provide reimbursement to federal employees
for childcare expenses incurred due to the lapse in appropriations
that began on October 1, 2025.
This acknowledgment of the ancillary costs and logistical challenges imposed
on working federal parents during a shutdown highlights the comprehensive
disruption caused by the funding crisis.
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.