Lawrence: Welcome to The FED Weekly for 21-27 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 most immediate story dominating the week of 21 to 27
December 2025 was, of course, the unprecedented holiday schedule.
President Donald Trump issued an Executive Order on 18 December 2025,
which closed executive departments and agencies on Wednesday, 24 December
2025, and Friday, 26 December 2025.
While the order was signed just prior to this reporting period, the operational
impact was felt squarely during this week.
This directive effectively created a five-day weekend for the majority of
the federal workforce, spanning from Wednesday through the following Sunday.
Moving beyond the holidays, the finalized pay and benefit structures
for 2026 were a major focus this week.
The Presidentâs alternative pay plan has cemented a 1.0
percent across-the-board pay increase for the General Schedule and other statutory
pay systems, effective in January 2026.
Crucially, this plan freezes locality pay percentages at 2025 levels.
This 1.0
percent increase applies to the base pay of current employees.
However, there is a notable exception that emerged in the details this
week regarding law enforcement.
Recognizing the acute retention challenges in that sector, the
administration directed the Office of Personnel Management to utilize
special rate authorities to provide an additional increase to
federal law enforcement officers.
These officers will receive the standard 1.0
percent increase plus an approximate 2.8
percent special rate adjustment, bringing their total 2026 raise to roughly 3.8
percent.
This move creates parity with the 3.8
percent pay raise secured by the military, acknowledging the distinct pressures on
the federal police and security workforce.
On the benefits front, this week marked the final transition period before the
launch of the Postal Service Health Benefits program on 1 January 2026.
For millions of postal employees and postal retirees, the Federal
Benefits Open Season, which concluded earlier in December, was
the last chance to select a plan.
During the week of 21 December, the Office of Personnel Management and the
Postal Service were in the final stages of processing "automatic enrollments"
for those who did not make a selection.
If you are a postal employee or retiree who did not actively choose a
new plan, you are being automatically mapped to a corresponding Postal
Service Health Benefits plan or the lowest-cost nationwide option that
is not a High Deductible Health Plan.
This administrative migration is massive, separating postal participants from
the wider Federal Employees Health Benefits pool for the first time.
Simultaneously, we saw developments regarding the federal budget.
While a full government shutdown was averted with the passage of a Continuing
Resolution extending funding through 30 January 2026, legislative activity
regarding shutdown protections continued.
The "Shutdown Fairness Act," introduced as Senate Bill 3012 by Senator Ron Johnson,
remains a key piece of legislation for the entire federal community.
This bill seeks to permanently appropriate funds for "excepted"
employeesâthose required to work during a shutdownâensuring they are
paid on time rather than waiting for back pay after the government reopens.
Although the bill struggled to overcome a filibuster earlier in the session
due to disagreements over coverage for furloughed workers, it remains
on the Senate calendar as a potential vehicle for future budget deals.
The uncertainty of the March deadline hangs over both active agencies and
retirement processing centers, making this bill a critical watch item.
Finally, in this section, we must address the 2026 Federal
Employees Health Benefits premiums.
While announced earlier, the reality of the double-digit premium
increases is hitting home as pay periods adjust for the new year.
The average premium increase of 12.3
percent for 2026 represents a significant absorption of the 1.0
percent pay raise for employees and the Cost-of-Living Adjustment for retirees.
This trend of rising healthcare costs outpacing income adjustments was a central
theme of discussion among federal employee groups throughout the holiday week.
Issues That Affect Retired Federal Workers
For our retired listeners, the week of 21 to 27 December 2025 was
the final countdown to the 2026 Cost-of-Living Adjustment, or COLA.
The numbers are locked in, and the payment you receive on 2 January
2026 will reflect these changes.
Retirees under the Civil Service Retirement System, or CSRS, will see a 2.8
percent increase in their gross annuity.
This figure is based on the rise in the Consumer Price Index for
Urban Wage Earners and Clerical Workers from the third quarter of
2024 to the third quarter of 2025.
This full inflation adjustment is designed to maintain the
purchasing power of your pension.
However, for those retired under the Federal Employees Retirement System,
or FERS, the adjustment is capped.
FERS retirees will receive a 2.0
percent increase.
This is due to the "diet COLA" provision in federal law, which dictates that if
the inflation index rises between 2.0
and 3.0
percent, the FERS COLA is set flat at 2.0
percent.
This 0.8
percent gap between inflation and your adjustment is a permanent
reduction in your purchasing power relative to your CSRS counterparts.
It is also important to remember the proration rule.
If you retired during the calendar year 2025, you will not receive the full COLA.
You will receive one-twelfth of the increase for each month you were on the
annuity rolls before 1 December 2025.
For example, if you retired in June 2025, you will receive half of the COLA amount.
While the COLA increases your gross income, we must look at
the net impact, specifically regarding Medicare Part B premiums.
The Centers for Medicare and Medicaid Services established the standard
monthly premium for 2026 at $202.90,
an increase of $17.90
from the 2025 rate.
For many retirees, this increase in Medicare premiums will consume a
significant portion of their COLA raise.
Furthermore, high-income retirees need to be aware of the Income-Related Monthly
Adjustment Amounts, or IRMAA, for 2026.
Based on your modified adjusted gross income from your 2024 tax return,
you may pay significantly more.
Single filers with income over $109,000 and joint filers over $218,000 will see
Part B premiums ranging from $284.10
to $689.90
per month per person.
Notices regarding these determinations were mailed by Social Security throughout
late December, so if you received a letter from Social Security this week, pay close
attention to the premium adjustments.
Legislatively, the disparity in COLA remains a hot topic.
The "Equal COLA Act" continues to be a priority for organizations
like the National Active and Retired Federal Employees Association.
This bill aims to eliminate the discrepancy between CSRS and
FERS adjustments, ensuring that FERS retirees receive the full
measure of inflation protection.
While there was no floor vote on this bill during the week of 21
December, the finalized 2026 rates serve as a stark reminder of why
this legislation is being championed.
Another legislative item of note for retirees is the "Federal Retirement
Fairness Act," House Bill 1522.
While primarily affecting those transitioning to retirement, its
passage would allow for the "buyback" of temporary service time post-1988.
This would allow many current retirees who had temporary service that did not count
toward their annuity to potentially adjust their service credit, though the current
version focuses on active employees making deposits before retirement.
It remains a bill to watch in the 119th Congress.
We also tracked the "Social Security 2100 Act" discussions, though
no movement occurred this week.
However, the taxation of your benefits remains unchanged for 2026.
Your federal annuity remains fully taxable at the federal level, and with
the expiration of certain Tax Cuts and Jobs Act provisions looming at
the end of 2025, tax planning for the 2026 tax year should be a priority as
you receive your January statement.
Finally, for retirees managing their accounts online, the Office
of Personnel Management's "Services Online" portal is your primary tool
for viewing your 1099-R tax forms and your Notice of Annuity Adjustment.
Despite the holiday closure, these digital services remained
largely accessible, allowing you to verify your new net payment amount
before the 2 January disbursement.
Issues That Affect Current Federal Workers
The most explosive development involves the Transportation
Security Administration workforce.
Following an announcement earlier in the month, the week of 21 December saw
continued fallout from the decision to decertify the union representing
47,000 Transportation Security Officers.
A new "Labor Framework" is set to take effect on 11 January 2026.
This framework rescinds the 2024 Collective Bargaining Agreement
between TSA and the American Federation of Government Employees.
Under this new directive, union dues will no longer be deducted from payroll
starting in January, and the formal grievance and arbitration procedures
established under the contract will be replaced by agency-defined protocols.
The Department of Homeland Security argues this move is necessary for
national security agility and efficient stewardship of taxpayer dollars.
In response, the House of Representatives passed a bill on 11 December 2025 to
restore these bargaining rights, but with the Senate schedule congested and
a veto threat from the White House, the implementation of this non-union
framework appears imminent for January.
In a sharp contrast to the reduction of traditional labor protections,
the administration launched a massive new hiring initiative this
month: the United States Tech Force.
Officially announced in mid-December, this program is actively recruiting
during the holiday period.
The Office of Personnel Management is seeking to hire approximately 1,000
artificial intelligence and cybersecurity experts for term appointments.
This "Tech Force" initiative represents a departure from
traditional civil service hiring.
It explicitly prioritizes skills and industry experience over formal
educational credentials and standard competitive service procedures.
These recruits will be placed in agencies like the Department of Defense, Treasury,
and Commerce to modernize legacy systems.
For current federal IT professionals, this introduces a new layer of
"elite" term employees, often hired at pay rates competitive with the
private sector, raising questions about the long-term structure of
the federal technical workforce.
Telework also remains a battlefield.
During the week of 21 December, discussions continued around the
"SHOW UP Act," or House Bill 139, and the "Federal Employee Return
to Work Act," House Bill 236.
These Republican-sponsored bills seek to mandate a return to 2019
pre-pandemic telework levels.
The legislation would require agencies to justify any expansion of telework
to Congress and could potentially link your locality pay to your actual
telework location rather than your agency worksiteâa change that could result
in significant pay cuts for employees working remotely from lower-cost areas.
While these bills are pending, the Office of Personnel Management issued
new guidance that was previewed this week regarding "weather and safety
leave" in the context of telework.
The guidance, clarified in a memo dated 29 December 2025, reinforces
that telework-eligible employees are generally expected to work from
home when federal offices are closed due to weather or other emergencies.
This effectively eliminates "snow days" for the telework-ready workforce, a
policy nuance that becomes highly relevant as we enter the winter storm season.
Regarding your paycheck, we detailed the 1.0
percent general increase in Section 1, but there are other adjustments
to note for current workers.
The aggregate pay limitation for 2026 is set at $253,100, which is
Level I of the Executive Schedule.
For those in the Senior Executive Service with certified performance
appraisal systems, the cap is $292,300.
Additionally, the pay freeze for senior political appointees continues, meaning
their pay remains locked despite the adjustments to the underlying schedules.
It is also vital to check your Leave and Earnings Statement for the pay period
covering 21 December through 3 January.
With the 24 December and 26 December holidays, ensure your time and
attendance was coded correctly.
If you worked, verify your holiday premium pay; if you were off, ensure
you were not charged annual leave.
Finally, we are monitoring the "Federal Adjustment to Income Rates Act,"
or FAIR Act, which had proposed a significantly higher pay raise of 4.3
percent for 2026.
While the 1.0
percent raise is now final, advocacy groups like the National Treasury
Employees Union have already signaled they will push for a more
substantial adjustment in the 2027 budget cycle to close the widening
pay gap with the private sector.
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.