Lawrence: Welcome to The FED Weekly for 30 November to 6 December 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 Final Hours of Open Season
If you have not yet finalized your health insurance elections for 2026,
you are officially out of time to delay.
The Federal Benefits Open Season concludes tomorrow, Monday, 8 December 2025.
This deadline applies to the Federal Employees Health Benefits (FEHB)
program, the newly established Postal Service Health Benefits (PSHB) program,
and the Federal Employees Dental and Vision Insurance Program (FEDVIP).
It is critical to understand that this year carries more
risk for inaction than usual.
Several plans have exited the program or reduced their service areas.
For instance, the GEHA Indemnity Benefit Plan Elevate Plus is not
available for the 2026 plan year.
If you are currently enrolled in a terminating plan and do not make a new
selection by tomorrow night, the Office of Personnel Management (OPM) will
automatically map you to a default plan.
For standard civil service employees, this default is the
GEHA Benefit Plan High Option.
For Postal Service employees transitioning to the PSHB, the default
is the Blue Cross and Blue Shield Service Benefit Plan FEP Blue Focus.
While automatic mapping ensures you are not left uninsured, the
default plan may not match your specific medical needs or budget.
Furthermore, for active employees who utilize Flexible Spending
Accounts (FSAFEDS), you must actively re-enroll by 8 December.
These accounts do not renew automatically.
The IRS has raised the pre-tax contribution limit for health care
FSAs to $3,400 for 2026, a $100 increase from the previous year,
with a carryover maximum of $680.
Given the rising cost of medical care, failing to re-enroll effectively
leaves tax savings on the table.
The 2026 Pay Raise: Awaiting the Executive Order
Turning to compensation, the federal community remains in a state of
suspended animation regarding the January 2026 pay adjustment.
As of this week, we are still awaiting the Presidentâs formal Executive
Order to finalize the pay tables.
On 28 August 2025, the President issued an alternative pay plan proposing a 1.0
percent across-the-board base pay increase for the General Schedule, with zero
increase allocated for locality pay.
This proposal stands in stark contrast to the 3.8
percent raise slated for military personnel.
While there was significant advocacy from federal unions and
some members of Congress to achieve parity between civilian and military
raises, no legislation has advanced to override the Presidentâs plan.
However, there is a notable exception emerging.
The administration has directed OPM to utilize special pay
authorities to provide an additional increase of approximately 2.8
percent for specific law enforcement officers.
This targeted adjustment is intended to bring their total raise to 3.8
percent, matching the military figure.
OPM is currently in consultation with agencies to determine exactly which
law enforcement categories will qualify for this special rate, with the goal
of releasing the special rate tables by the end of the calendar year.
For the vast majority of the workforceâincluding retirees who look
to pay tables to project future high-3 calculations for their successorsâthe 1.0
percent figure appears increasingly likely to stand.
Unless Congress inserts language into a spending bill before
the end of December, the 1.0
percent raise will be finalized by Executive Order and effective the
first full pay period of January 2026.
Thrift Savings Plan Updates
In financial news, the Thrift Savings Plan (TSP) is reflecting
the broader economic uncertainty.
As of December 2025, the interest rate for the G Fundâthe government
securities fund utilized by risk-averse investors and retirees
seeking stabilityâhas risen to 4.125
percent.
This rate is calculated based on the weighted average yield of U.S.
Treasury securities and has ticked up from 4.00
percent in previous months as the Federal Reserve maintains higher interest rates.
For those with exposure to the equity markets, the year has
been volatile but profitable.
The I Fund, which tracks international stocks, has posted a
year-to-date return of nearly 29.5
percent as of early December, while the C Fund is up 18.2
percent.
However, participants should be aware of year-end processing dates.
Withdrawals processed after noon Eastern Time on 29 December 2025
will be reported to the IRS as income for the 2026 tax year, not 2025.
Planning your distributions carefully in these final weeks
is essential for tax management.
Economic Data Delays
Finally, a note on the data environment we are operating in.
The Bureau of Labor Statistics (BLS) announced on 5 December 2025 that the
release of the monthly jobs report has been delayed until 16 December.
This delay is a direct ripple effect of the recent government shutdown,
which restricted BLS operations.
This lack of timely data complicates the ability of policymakers and unions
to argue for economic adjustments, as the "gold standard" labor market
data for October will simply never be published in its entirety.
This is a subtle but significant degradation of the administrative
infrastructure that underpins federal pay and policy decisions.
Issues That Affect Retired Federal Workers
2026 COLA and Benefit Adjustments
Looking forward to the new year, the Cost-of-Living Adjustment
(COLA) for 2026 has been finalized.
Social Security benefits and Supplemental Security Income (SSI)
payments will increase by 2.8
percent in 2026.
This same 2.8
percent adjustment applies to Civil Service Retirement
System (CSRS) annuities.
For SSI recipients, the increased payments will begin on 31 December 2025.
For Social Security and CSRS retirees, the increase will appear in the
payment received in January 2026.
While this increase is intended to offset inflation, retirees must carefully balance
this against rising health care costs.
With FEHB premiums increasing for the 2026 plan year, a
significant portion of this 2.8
percent COLA may be absorbed by higher insurance deductions.
It is imperative that you review your annuity statement in January to understand
your net change in purchasing power.
Additionally, earning limits for retirees under full retirement
age will increase in 2026.
The earnings limit will rise to $24,480.
For every $2 earned above this limit, $1 is withheld from benefits.
If you are a FERS retiree receiving the Special Retirement Supplement, or
a Social Security beneficiary who has returned to work, ensure your 2026
income projections remain under this threshold to avoid unexpected penalties.
Issues That Affect Current Federal Workers
The first week of December has been defined by a dramatic legal confrontation
between federal unions and the State Department, as well as new regulatory
threats to civil service protections.
The State Department RIF Lawsuit
The most significant story of the week is the collision between agency
layoffs and the Continuing Resolution.
The spending bill passed in November contains a specific provisionâSection
120âthat prohibits agencies from using federal funds to "initiate, carry out,
implement, or otherwise notice a reduction in force" (RIF) through 30 January 2026.
Despite this statutory prohibition, the State Department attempted to
proceed with the termination of approximately 250 Foreign Service
Officers on Friday, 5 December 2025.
The Department argued that because these RIF notices were originally
issued in Julyâmonths before the shutdown and the subsequent
CRâthe prohibition did not apply.
They claimed they were merely finalizing a process already in motion.
The American Federation of Government Employees (AFGE) and the American
Foreign Service Association (AFSA) filed an emergency lawsuit, AFGE v.
Biden, seeking a Temporary Restraining Order (TRO) to halt the firings.
On the evening of Thursday, 4 December 2025, U.S.
District Judge Susan Illston ruled in favor of the unions.
Judge Illstonâs ruling was precise.
She focused on the word "implement" in the statute.
She determined that by separating employees on 5 December, the State
Department would be taking an affirmative step to "implement" a RIF, which
Congress had explicitly forbidden.
She issued a TRO blocking the layoffs, stating that the unions
were likely to succeed on the merits and that the employees would suffer
irreparable harm if terminated.
This ruling has immediate implications beyond the State Department.
There are roughly 800 other federal employees at agencies such as the
Department of Educationâs Office for Civil Rights, the Defense Technical
Information Center, and the Small Business Administration who are
facing similar "carry-over" RIFs.
The unions are now seeking to expand the scope of the TRO to
protect these workers as well.
For now, the 250 State Department employees remain on the payroll, but
the legal battle will continue as the administration is expected to
challenge the interpretation of the CR.
Schedule F Regulations Re-Emerge
While the courts battle over current layoffs, a longer-term threat to the civil
service structure re-emerged this week.
On 5 December 2025, Government Executive reported that the Office of Personnel
Management (OPM) has circulated draft final regulations for "Schedule F"
(now renamed Schedule Policy/Career).
These regulations would create a new job classification for
"policy-related" positions, effectively stripping those employees
of their civil service protections and making them at-will employees.
The draft regulations reportedly describe the existing civil service
protections as "unconstitutional overcorrections" to the patronage
system and assert that the President requires the ability to implement
an agenda "free from antidemocratic, unaccountable bureaucratic resistance".
OPM estimates that approximately 50,000 federal workers could be
reclassified under this new schedule.
This represents about 2 percent of the civilian workforce, but the
impact would be concentrated in policy-making and regulatory roles.
The publication of these final rules appears imminent, setting
the stage for a profound structural change to the federal service unless
blocked by Congress or the courts.
NDAA 2026: The Fight for Union Rights
On Capitol Hill, the legislative process for the Fiscal Year 2026
National Defense Authorization Act (NDAA) is reaching its climax.
On 4 December 2025, the National Federation of Federal Employees
(NFFE) sent a letter to congressional leadership urging the retention of a
critical amendment in the final bill.
The House version of the NDAA includes a provision that would restore collective
bargaining rights for Department of Defense (DoD) civilian employees.
These rights were previously curtailed by an Executive Order
citing national security concerns.
The NFFE letter, supported by the Federal Workers Alliance, argues that the removal
of these rights was counterproductive and costly, and that unionized civilians
have supported the DoD mission for decades without compromising security.
Because this provision exists in the House bill but not the Senate version,
it is vulnerable to being stripped out during the conference committee
negotiations currently underway.
The final conference report is expected soon, and its content will determine
whether hundreds of thousands of DoD civilians regain their union protections.
Wage Grade Pay Raises
Finally, there is positive news for the blue-collar workforce.
On 1 December 2025, it was confirmed that retroactive pay raises are
finally being processed for more than 118,000 DoD Wage Grade (WG) employees.
These employees, paid under the Federal Wage System, had seen their
2024 pay adjustments delayed due to administrative gridlock and the shutdown.
The DoD Wage Committee has now authorized the updates, and the raises
are being applied retroactively to their original effective dates in 2024.
While the payout timeline will vary by payroll provider, the confirmation that
the freeze has thawed is a significant relief for the trade and craft
workers essential to base operations.
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.