WEBVTT NOTE This file was generated by Descript 00:00:00.029 --> 00:00:06.280 Lawrence: Welcome to The FED Weekly for 24-30 August 2025, your essential 00:00:06.280 --> 00:00:10.399 weekly briefing on the policies and proposals shaping your career, 00:00:10.619 --> 00:00:12.739 your benefits, and your retirement. 00:00:13.189 --> 00:00:17.190 Whether you’re a current federal employee navigating changes in the civil service, 00:00:17.549 --> 00:00:22.549 or a retiree keeping a close watch on your hard-earned pension and healthcare, this 00:00:22.549 --> 00:00:27.329 is your source for the latest news from Capitol Hill and the executive branch. 00:00:27.947 --> 00:00:32.268 Each week, we cut through the noise to bring you the critical updates on budget 00:00:32.268 --> 00:00:37.828 negotiations, pay raises, workforce policies, and the legislative battles that 00:00:37.828 --> 00:00:40.078 directly impact the federal community. 00:00:40.458 --> 00:00:43.618 Let's get you up to speed on what happened this past week. 00:00:44.277 --> 00:00:48.508 Section 1: Issues That Affect Current and Retired Federal Workers 00:00:49.083 --> 00:00:53.094 The 2025 FEHB Premium Shock: A Historic Increase Finalized 00:00:53.711 --> 00:00:57.402 The most significant financial news impacting the entire federal community 00:00:57.402 --> 00:01:02.911 this week is the finalization of premium rates for the 2025 Federal Employees 00:01:02.911 --> 00:01:05.562 Health Benefits, or FEHB, program. 00:01:06.071 --> 00:01:09.251 The Office of Personnel Management (OPM) confirmed what many had 00:01:09.251 --> 00:01:14.301 feared: enrollees will face an average premium increase of 13.5% 00:01:14.612 --> 00:01:16.192 for their share of the costs. 00:01:16.311 --> 00:01:20.362 This represents the largest such hike in nearly two decades and continues 00:01:20.362 --> 00:01:24.282 a painful trend of substantial increases, following a 7.7% 00:01:24.282 --> 00:01:27.291 rise in 2024 and an 8.7% 00:01:27.291 --> 00:01:28.872 rise in 2023. 00:01:29.635 --> 00:01:33.746 For the average federal employee and retiree, this translates into 00:01:33.746 --> 00:01:38.165 a direct hit to their budget, costing an additional $26.10 00:01:38.245 --> 00:01:39.556 per biweekly paycheck. 00:01:40.175 --> 00:01:43.255 While the government's contribution to premiums will also increase, 00:01:43.535 --> 00:01:46.145 it will do so by a lesser 10.1%, 00:01:46.565 --> 00:01:50.036 shifting a greater portion of the rising costs onto enrollees. 00:01:50.675 --> 00:01:55.376 OPM has attributed this dramatic surge to several key factors: price 00:01:55.376 --> 00:01:59.225 increases from healthcare providers and suppliers, a significant rise in 00:01:59.225 --> 00:02:04.645 the utilization of certain prescription drugs, particularly GLP-1 anti-obesity 00:02:04.645 --> 00:02:09.165 medications like Ozempic and Wegovy, and higher spending on both outpatient 00:02:09.165 --> 00:02:11.415 procedures and behavioral health services. 00:02:11.936 --> 00:02:16.086 The Federal Employees Dental and Vision Insurance Program, or FEDVIP, will see 00:02:16.086 --> 00:02:19.285 more modest average increases of 2.97% 00:02:19.285 --> 00:02:22.035 for dental plans and 0.87% 00:02:22.035 --> 00:02:23.026 for vision plans. 00:02:23.631 --> 00:02:27.492 The combination of these financial and policy developments will make the 00:02:27.492 --> 00:02:34.112 upcoming Open Season, which runs from November 11 to December 9, 2024, one 00:02:34.112 --> 00:02:36.302 of the most critical in recent memory. 00:02:36.902 --> 00:02:41.382 All federal employees and annuitants will need to meticulously re-evaluate 00:02:41.382 --> 00:02:45.421 their plan choices to mitigate the impact of these rising costs. 00:02:46.054 --> 00:02:48.523 The Looming Threat of a Government Shutdown 00:02:49.111 --> 00:02:53.202 As one fiscal year winds down, the battle over the next one begins. 00:02:53.832 --> 00:02:58.822 With the end of fiscal year 2025 approaching on September 30, tensions 00:02:58.822 --> 00:03:03.681 are escalating in Congress over the 12 appropriations bills needed to fund 00:03:03.681 --> 00:03:06.211 the government for fiscal year 2026. 00:03:06.932 --> 00:03:10.852 As of this week, none of those 12 bills have been enacted into law. 00:03:11.502 --> 00:03:16.621 On August 29, 2025, Democratic leaders in Congress voiced growing 00:03:16.621 --> 00:03:21.061 concern over the lack of progress and the contentious political climate, 00:03:21.572 --> 00:03:25.042 stating that the likelihood of a government shutdown is increasing. 00:03:25.611 --> 00:03:29.901 A shutdown would have distinct impacts on current and retired employees. 00:03:30.322 --> 00:03:34.382 For the active workforce, all non-essential federal employees would 00:03:34.382 --> 00:03:36.452 be placed on an unpaid furlough. 00:03:36.952 --> 00:03:40.462 While Congress has historically passed legislation to provide back 00:03:40.462 --> 00:03:44.742 pay after shutdowns conclude, the immediate loss of income can cause 00:03:44.742 --> 00:03:46.481 significant financial hardship. 00:03:47.162 --> 00:03:50.101 For federal annuitants, the situation is different. 00:03:50.591 --> 00:03:54.651 Retirement annuity payments, which are drawn from the Civil Service Retirement 00:03:54.702 --> 00:03:59.622 and Disability Trust Fund, are not subject to annual appropriations and 00:03:59.622 --> 00:04:01.481 would continue to be paid on time. 00:04:01.872 --> 00:04:04.401 The same is true for Social Security benefits. 00:04:04.641 --> 00:04:08.781 However, a shutdown would severely disrupt agency operations. 00:04:09.301 --> 00:04:13.342 This means that OPM and the Social Security Administration would halt 00:04:13.342 --> 00:04:17.182 the processing of new retirement applications, changes to benefits, 00:04:17.182 --> 00:04:19.051 and other customer service requests. 00:04:19.472 --> 00:04:23.702 This would create significant delays and backlogs, leaving recent and 00:04:23.702 --> 00:04:28.351 prospective retirees in a state of uncertainty until funding is restored. 00:04:28.977 --> 00:04:32.378 Section 2: Issues That Affect Retired Federal Workers 00:04:32.998 --> 00:04:36.368 2026 COLA Projections: A Familiar Disparity 00:04:36.954 --> 00:04:40.974 For federal retirees, one of the most important numbers of the year is the 00:04:40.974 --> 00:04:43.844 annual Cost-of-Living Adjustment, or COLA. 00:04:44.284 --> 00:04:48.564 Projections for the 2026 COLA became clearer this month with the release 00:04:48.564 --> 00:04:52.854 of the July 2025 Consumer Price Index for Urban Wage Earners and Clerical 00:04:52.854 --> 00:04:57.193 Workers (CPI-W) on August 12, 2025. 00:04:58.004 --> 00:05:01.793 Based on this data, the 2026 COLA is projected to be 2.5% 00:05:01.793 --> 00:05:03.513 - 2.6% 00:05:03.513 --> 00:05:07.654 for retirees under the older Civil Service Retirement System, or CSRS. 00:05:08.239 --> 00:05:11.420 However, for the majority of federal retirees who are covered by the 00:05:11.420 --> 00:05:16.040 Federal Employees Retirement System, or FERS, the projection is a lower 2.0% 00:05:16.040 --> 00:05:17.910 - 2.1% 00:05:17.970 --> 00:05:18.700 increase. 00:05:19.290 --> 00:05:22.939 This disparity is not an anomaly; it is the result of the statutory 00:05:22.939 --> 00:05:24.839 formula governing the FERS COLA. 00:05:25.540 --> 00:05:29.480 When the inflation rate as measured by the CPI-W falls between 2% 00:05:29.480 --> 00:05:33.880 and 3%, CSRS retirees receive the full amount, but the FERS COLA is 00:05:33.919 --> 00:05:36.390 automatically capped at a flat 2%. 00:05:36.490 --> 00:05:41.299 This is often referred to as the "diet COLA," and it has been a long-standing 00:05:41.299 --> 00:05:45.619 point of contention for retiree advocates, who argue that it systematically 00:05:45.619 --> 00:05:49.740 erodes the purchasing power of FERS annuities over a long retirement. 00:05:50.760 --> 00:05:55.560 Legislation to address this, such as the Equal COLA Act, has been introduced 00:05:55.560 --> 00:05:57.260 but has failed to gain traction. 00:05:57.915 --> 00:06:00.985 New Legislation for Military Retirees: The FORWARD Act 00:06:01.559 --> 00:06:05.170 There was a notable legislative development this week for military 00:06:05.170 --> 00:06:08.460 retirees who also participate in the federal government's 00:06:08.460 --> 00:06:11.040 401(k)-style retirement savings plan. 00:06:11.700 --> 00:06:16.459 On August 25, 2025, a bipartisan bill was introduced in the House of 00:06:16.459 --> 00:06:21.069 Representatives by Representative Jen Kiggans, a Republican from Virginia. 00:06:21.700 --> 00:06:25.530 The bill is titled the "Financial Opportunities for Retirees and 00:06:25.530 --> 00:06:30.579 Warriors Advancing Retirement Development Act," or the FORWARD Act. 00:06:31.171 --> 00:06:35.512 If enacted, the FORWARD Act would, for the first time, allow certain veterans 00:06:35.512 --> 00:06:40.182 to continue contributing to their Thrift Savings Plan, or TSP, accounts 00:06:40.361 --> 00:06:42.411 after they have separated from service. 00:06:43.052 --> 00:06:47.152 Under current law, all contributions to the TSP must cease upon leaving 00:06:47.152 --> 00:06:48.841 federal or military employment. 00:06:49.752 --> 00:06:53.402 This legislation would specifically extend eligibility to two groups: 00:06:54.011 --> 00:06:57.922 military members who are entitled to retirement pay, and veterans who 00:06:57.922 --> 00:07:02.761 have a 100% disability rating from the Department of Veterans Affairs. 00:07:03.351 --> 00:07:07.491 These individuals would be permitted to contribute a portion of their military 00:07:07.491 --> 00:07:12.902 retirement pay or their disability compensation directly into their existing 00:07:12.902 --> 00:07:18.391 TSP accounts, allowing them to continue building their retirement savings within 00:07:18.391 --> 00:07:20.592 the plan they are already familiar with. 00:07:21.332 --> 00:07:26.281 The bill explicitly clarifies that these new contributions would not be eligible 00:07:26.281 --> 00:07:28.152 for any government matching funds. 00:07:28.242 --> 00:07:32.002 The legislation has been referred to the House Committee on Oversight and 00:07:32.002 --> 00:07:34.631 Government Reform for consideration. 00:07:35.771 --> 00:07:39.122 Section 3: Issues That Affect Current Federal Workers 00:07:39.717 --> 00:07:43.907 The 2026 Federal Pay Raise: A Shift from Freeze to 1% 00:07:44.499 --> 00:07:48.690 For months, the active federal workforce has been bracing for a potential pay 00:07:48.690 --> 00:07:54.579 freeze in 2026, a prospect first raised in President Trump's initial budget proposal. 00:07:55.050 --> 00:07:59.390 However, on Friday, August 28, 2025, the administration submitted 00:07:59.390 --> 00:08:03.900 its formal alternative pay plan to Congress, revealing a different path. 00:08:04.470 --> 00:08:07.619 The plan calls for an average pay raise of 1.0% 00:08:07.929 --> 00:08:11.339 for civilian federal employees, with locality pay being 00:08:11.339 --> 00:08:13.119 frozen at current levels. 00:08:13.762 --> 00:08:18.822 By law, the president must issue such a plan by the end of August to prevent 00:08:18.822 --> 00:08:22.911 a much larger, automatic pay increase from taking effect under the Federal 00:08:22.911 --> 00:08:26.161 Employees Pay Comparability Act of 1990. 00:08:26.892 --> 00:08:30.191 In his letter to Congress, President Trump stated that without this 00:08:30.191 --> 00:08:34.441 alternative plan, the automatic formula would have triggered a 3.3% 00:08:34.441 --> 00:08:40.582 across-the-board increase plus an average locality pay hike of 18.88%. 00:08:41.275 --> 00:08:46.866 A key component of the administration's plan is a targeted pay raise of 3.8% 00:08:47.236 --> 00:08:50.236 for "certain categories of law enforcement personnel". 00:08:50.756 --> 00:08:54.645 This move is designed to create pay parity with the 3.8% 00:08:54.675 --> 00:08:58.965 raise planned for uniformed military service members in 2026. 00:08:59.676 --> 00:09:03.246 The Office of Personnel Management has been tasked with determining which 00:09:03.246 --> 00:09:08.026 specific law enforcement job series will qualify for this larger increase. 00:09:08.662 --> 00:09:12.441 The reaction from federal employee unions was swift and critical. 00:09:13.012 --> 00:09:16.692 Doreen Greenwald, president of the National Treasury Employees Union, 00:09:16.951 --> 00:09:21.692 called the 1% figure inadequate, particularly in light of the massive FEHB 00:09:21.692 --> 00:09:24.842 premium hikes, and argued that the 3.8% 00:09:24.872 --> 00:09:28.571 raise for law enforcement and the military should be extended 00:09:28.571 --> 00:09:30.061 to all federal employees. 00:09:30.491 --> 00:09:34.602 Unions are now urging Congress to intervene and legislate a higher pay 00:09:34.602 --> 00:09:38.301 raise, as it has done in the past to override presidential pay plans. 00:09:38.782 --> 00:09:41.402 They continue to advocate for the 4.3% 00:09:41.402 --> 00:09:43.751 average raise proposed in the FAIR Act. 00:09:44.191 --> 00:09:47.842 To finalize the 1% raise, the President must issue a formal 00:09:47.842 --> 00:09:49.672 executive order in December. 00:09:50.287 --> 00:09:53.827 OPM Overhauls Performance Awards to Reward Top Performers 00:09:54.405 --> 00:09:57.915 The administration is also moving to change how federal employees 00:09:57.915 --> 00:09:59.276 are rewarded for their work. 00:09:59.716 --> 00:10:05.136 In a government-wide memorandum issued on August 11, 2025, OPM Director 00:10:05.136 --> 00:10:09.636 Scott Kupor unveiled new guidance aimed at fundamentally overhauling the 00:10:09.636 --> 00:10:11.806 distribution of performance awards. 00:10:12.966 --> 00:10:16.826 The stated goal is to move away from a system where award money is spread 00:10:16.826 --> 00:10:21.095 thinly across the workforce and instead concentrate larger bonuses 00:10:21.095 --> 00:10:23.556 on a smaller group of top performers. 00:10:24.195 --> 00:10:28.936 Under the new policy, agencies are directed to "normalize" their performance 00:10:28.936 --> 00:10:33.895 ratings and are required to designate at least 60% of their available bonus 00:10:33.895 --> 00:10:37.805 pools for employees who receive the highest ratings, typically a Level 00:10:37.805 --> 00:10:40.516 4 or Level 5 on a five-tier system. 00:10:41.276 --> 00:10:45.346 The guidance also encourages managers to make greater use of non-monetary 00:10:45.346 --> 00:10:50.055 recognition, such as time-off awards and Quality Step Increases, as well 00:10:50.055 --> 00:10:55.065 as "special act" awards to recognize specific accomplishments in real time. 00:10:55.727 --> 00:10:59.547 The policy is even more stringent for the government's top leaders. 00:11:00.247 --> 00:11:05.127 For the Senior Executive Service, or SES, the guidance establishes a hard cap, 00:11:05.448 --> 00:11:10.248 which will become mandatory in fiscal year 2026, stipulating that no more than 00:11:10.248 --> 00:11:15.677 30% of an agency's executives can receive one of the top two performance ratings. 00:11:16.397 --> 00:11:20.097 All federal agencies are required to submit their plans for complying 00:11:20.097 --> 00:11:24.847 with this new awards philosophy to OPM by September 8, 2025. 00:11:25.603 --> 00:11:27.603 Agency and Administrative Roundup 00:11:28.181 --> 00:11:31.582 In other news from across the government this week, the Internal 00:11:31.582 --> 00:11:35.662 Revenue Service has reversed course on planned workforce reductions. 00:11:36.092 --> 00:11:41.832 In a report from August 22, 2025, it was confirmed that the IRS has canceled 00:11:41.832 --> 00:11:44.061 its plans for widespread layoffs. 00:11:44.522 --> 00:11:47.692 The agency, which has seen its staffing levels shrink by about 00:11:47.692 --> 00:11:52.002 a quarter, will now focus on strategic hiring and reassignments 00:11:52.051 --> 00:11:54.041 to fill mission-critical roles. 00:11:54.121 --> 00:11:58.342 It will also rescind some of the deferred resignation offers that 00:11:58.342 --> 00:12:02.451 were part of the administration's earlier "Fork in the Road" program. 00:12:03.097 --> 00:12:07.448 The Office of Personnel Management also made several administrative announcements. 00:12:08.008 --> 00:12:13.788 In August 2025, the agency issued updated guidance and new Q&As to clarify 00:12:13.788 --> 00:12:17.897 policies related to President Trump's executive order on "Strengthening 00:12:17.897 --> 00:12:21.977 Probationary Periods in the Federal Service," which makes it easier for 00:12:21.977 --> 00:12:26.938 agencies to remove employees during their initial one- or two-year trial periods. 00:12:27.668 --> 00:12:32.988 On August 20, 2025, OPM officially announced that the 2025 Federal 00:12:32.988 --> 00:12:36.457 Employee Viewpoint Survey, or FEVS, has been canceled. 00:12:36.998 --> 00:12:40.428 The flagship survey on employee morale, which had already been 00:12:40.428 --> 00:12:45.417 delayed for months, will be retooled and is expected to return in 2026. 00:12:46.018 --> 00:12:51.667 Finally, on August 28, 2025, OPM announced that it is centralizing its guidance 00:12:51.667 --> 00:12:55.568 memorandums for Chief Human Capital Officers by moving them from a separate 00:12:55.568 --> 00:12:58.637 website directly onto the main OPM.gov 00:12:58.707 --> 00:13:00.847 portal to improve accessibility. 00:13:01.471 --> 00:13:04.261 Legislative Watch: Key Bills Remain in Committee 00:13:04.919 --> 00:13:09.470 Finally, we are tracking two House bills of interest to federal employees 00:13:09.760 --> 00:13:13.599 that saw no new action this week but remain pending in committee. 00:13:14.221 --> 00:13:15.382 First is H.R. 00:13:15.382 --> 00:13:18.942 1522, the Federal Retirement Fairness Act. 00:13:19.431 --> 00:13:24.511 Introduced in February 2025, this bill would be a significant benefit 00:13:24.511 --> 00:13:28.112 for employees who started their careers in temporary positions. 00:13:28.631 --> 00:13:33.091 It would allow them to make retroactive retirement contributions to receive FERS 00:13:33.091 --> 00:13:37.722 credit for temporary or non-deduction service performed after December 31, 00:13:37.722 --> 00:13:43.212 1988, essentially allowing them to "buy back" that time toward their pension. 00:13:43.878 --> 00:13:44.828 Second is H.R. 00:13:44.828 --> 00:13:50.248 201, the Federal Employee Performance and Accountability Act of 2025. 00:13:50.878 --> 00:13:55.447 Introduced in January 2025, this bill proposes a five-year pilot 00:13:55.447 --> 00:13:59.277 program that would radically alter the pay system for some employees. 00:13:59.718 --> 00:14:03.418 It would tie pay adjustments directly to performance for a select group of 00:14:03.418 --> 00:14:06.397 employees at the GS-11 level and above. 00:14:07.248 --> 00:14:11.368 Under the pilot, employees who significantly exceed performance metrics 00:14:11.637 --> 00:14:17.247 could receive a pay increase of up to 10%, but those who are rated below expectations 00:14:17.548 --> 00:14:19.708 would see their pay cut by 10%. 00:14:20.328 --> 00:14:24.447 Participants in the pilot would not be eligible for the standard annual 00:14:24.487 --> 00:14:26.888 across-the-board and locality pay raises. 00:14:27.427 --> 00:14:31.298 Both bills remain in the House Committee on Oversight and Government Reform. 00:14:31.983 --> 00:14:35.563 And that’s a wrap on this week’s Federal Workforce Roundup. 00:14:35.954 --> 00:14:40.343 The landscape for federal employees and retirees is constantly shifting, 00:14:40.643 --> 00:14:45.074 with major decisions being made about everything from pay and job security 00:14:45.273 --> 00:14:49.013 to retirement benefits and the very structure of the civil service. 00:14:49.614 --> 00:14:51.853 Staying informed is your best tool. 00:14:52.183 --> 00:14:56.704 Be sure to subscribe wherever you get your podcasts, so you never miss an update. 00:14:57.313 --> 00:14:58.354 Thanks for tuning in. 00:14:58.683 --> 00:15:01.483 We’ll be back next week to track the latest developments 00:15:01.483 --> 00:15:02.593 and what they mean for you. 00:15:02.883 --> 00:15:05.983 Until then, stay engaged and be well.