The FED Weekly 1-7 June 2025 (Episode 1)

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 week. The first week of June 2025 brought several important developments for the federal community. Below is a roundup of key news affecting U.S. federal employees and retirees, organized by category for clarity.

Issues That Affect Current and Retired Federal Workers Congressional Reconciliation Bill Civil Service Changes: A major budget reconciliation package moving through Congress contains sweeping provisions targeting federal pay and benefits. The House narrowly passed the “One Big Beautiful Bill Act” in late May, and the Senate is now weighing its own version.

The legislation would eliminate the FERS annuity supplement (the “bridge” payment for retirees under 62) effective 2028, with exemptions for certain mandatory early-retirement personnel. It also introduces an “at-will” employment option for new hires newly hired feds would choose between keeping normal civil-service job protections but contributing ~14.4% of salary to FERS, or giving up tenure protections and contributing 9.4% (a 5% increase).

Other provisions would impose a $350 fee for Merit Systems Protection Board appeals (refunded if the employee prevails) and require audits to remove ineligible family members from FEHB health insurance plans. Notably, lawmakers removed some earlier proposals a switch to a “high-5” annuity calculation and a general FERS contribution hike after opposition.

Federal employee organizations warn these changes could be devastating: the National Active and Retired Federal Employees Association (NARFE) cautioned that increasing FERS contributions is essentially “a 5% pay cut” for new employees while also undermining merit-based civil service protections. The American Federation of Government Employees (AFGE) blasted the package as “a direct assault on federal employees” that would slash take-home pay and obliterate workplace rights.

Unions are urging the Senate to strip these provisions, and final negotiations are expected by early July. Supreme Court Expands Paid Military Leave: In a victory for federal employees who are military reservists, the U.S. Supreme Court ruled on April 30 in Feliciano v. DOT that agencies must grant an additional 22 days of paid military leave per year for reserve members called to active duty during a national emergency.

The Court held that a federal employee is “entitled to differential pay if the reservist’s service temporally coincides with a declared national emergency” without any need to prove a direct connection to the specific emergency. This means current or former federal workers who served on such active duty orders may have been improperly denied paid leave and pay differentials in the past.

Affected individuals (e.g. veterans of post-9/11 contingency operations) can file claims for compensation. Successful claimants who are still federal employees will have leave restored, while those who retired or left government can receive lump-sum back pay for the missed leave, at their salary rate at retirement.

This court decision strengthens USERRA rights and could benefit thousands of veteran federal employees and retirees who were previously forced to use personal leave or take a pay cut when mobilized. Issues That Affect Current Federal Workers Federal Pay Raise Outlook: The White House’s fiscal year 2026 budget, released in early June, proposed no pay increase for federal civilian employees.

President Trump’s budget was silent on a 2026 raise (widely interpreted as a plan for 0%), even as it included a 3.8% raise for military personnel. Unless Congress intervenes, this could mean a freeze on General Schedule pay next year.

(By contrast, for 2025 the military received a 4.5% increase while civilians got about 2%.) Lawmakers and federal employee advocates are already pushing back: Representative Gerry Connolly (D-VA) and Senator Brian Schatz (D-HI) reintroduced their annual pay parity bill, this time proposing a 4.3% average pay raise for federal employees in 2026. While such bills (the latest version of the FAIR Act) have historically failed to pass, they signal growing pressure to at least match military raises.

Unions argue that “pay parity” equal percentage raises for civilian and military is needed to maintain federal workforce morale and competitiveness. The final word on the 2026 raise will likely come in late August (when the President must formally announce any alternative pay plan) and ultimately in Congress or a December executive order. Telework Guidance Amid D.C.

Events: In an interesting turn, OPM is encouraging telework and flexible schedules for Washington, D.C.-area federal employees in mid-June due to a large public event. In a memo to agencies, OPM advised that preparations for the Army’s 250th Birthday Parade (scheduled for June 14 on the National Mall) could snarl traffic starting Wednesday, June 11, and urged agencies to permit “situational/unscheduled telework and other workforce flexibilities” later that week.

Agencies can also approve employee leave or alternative work hours to alleviate the disruptions. This guidance comes just months after the administration’s push to curtail routine telework President Trump in January ordered agencies to end widespread telework arrangements but practical needs have prompted a temporary exception.

Notably, the USDA even instructed its D.C. headquarters staff to work remotely for three weeks because the agency’s building is being used to quarter soldiers participating in the parade. Employees reporting on-site were warned to expect delays and monitor road closures. While brief, this flexibilities memo tacitly acknowledges that telework remains an important tool for continuity of operations, even as normal telework policies have tightened.

OPM Moves to Quicken Discipline Process: The Office of Personnel Management announced a proposed rule on June 2 that would make it easier to fire federal employees for misconduct or poor performance. The rule is meant to “enhance the federal government’s ability to hold employees accountable for serious misconduct,” according to OPM’s statement.

It would implement President Trump’s “Department of Government Efficiency” workforce initiative by streamlining the procedures for removing employees who “break the public’s trust,” effectively extending the tougher suitability standards used in hiring to post-hire conduct.

Currently, agencies face lengthy, complex processes to discipline or remove personnel, and administration officials argue this breeds a culture with “no recourse for lack of performance.” OPM’s Acting Director Chuck Ezell said the changes will cut red tape and reinforce that public service is a privilege, not a right. The proposed regulations (set to be published in the Federal Register on June 3) will be open for public comment through July 3.

Federal employee unions are expected to object, as the rules would likely curtail the time and appeals avenues employees have in adverse actions. This is one of several workforce policies the administration is pursuing to speed up hiring and firing in government. Workforce Reduction Plans and Pushback: The administration’s drive to shrink the federal workforce by reorganizing agencies and cutting staff continues to unfold and to meet legal challenges.

At the Department of Veterans Affairs, Secretary Doug Collins has proposed cutting around 80,000 jobs (about 15% of VA’s staff) to bring headcount back to 2019 levels. Additionally, agencies across government have been directed to prepare Reduction in Force (RIF) plans as part of President Trump’s initiative to “optimize” the workforce. However, a federal court injunction has blocked implementation of mass RIFs at many agencies pending further review.

(This stems from a lawsuit by federal employee unions, where a judge in late April barred agencies from executing the governmentwide reorganization via layoffs; that case is now headed to the Supreme Court). In agencies not explicitly covered by the injunction, some layoffs are moving forward for example, the National Archives informed nearly 100 employees (about 3% of its staff) of RIF separations this month. Federal employee unions and advocacy groups are actively protesting these cuts.

On June 6, hundreds of veterans and federal workers rallied on the National Mall to oppose the VA downsizing, arguing it will harm veteran services.

AFGE National President Everett Kelley (himself an Army veteran) noted that “the VA is a place of veterans serving veterans,” and warned the “mass reorganization plans are a targeted attack on veteran jobs, health care, benefits and union rights.” Other speakers, including VA nurses, warned that frontline capacity would be stretched dangerously thin, impacting medical care and benefits processing.

One Homeland Security employee at the rally, an Army veteran, voiced concern that “if they’re going to cut people, benefits are going to go down…everything is going to roll downhill.” Despite these objections, agency leaders insist that only “non-mission-critical” positions will be eliminated and that efficiencies will improve.

This tug-of-war between the administration’s reform agenda and employee protections is ongoing with further legal showdowns expected if the Supreme Court weighs in, and continued public pressure from unions to protect jobs. Postal Service Contract Agreement: In labor news, the American Postal Workers Union (APWU) and the U.S. Postal Service reached a tentative deal on a new union contract.

On June 6, APWU President Mark Dimondstein announced a tentative 2024–2027 Collective Bargaining Agreement (CBA) with USPS. The agreement is set for three years and covers postal clerks, maintenance workers, and other APWU-represented employees nationwide. While full details of the tentative contract were not immediately released, such agreements typically address wages (cost-of-living adjustments, general raises), benefits, and work rules.

The deal now goes to APWU’s membership for ratification in the coming weeks. Reaching a negotiated settlement is a positive development, as it averts the need for binding arbitration and ensures continuity of operations for USPS.

(The previous APWU contract had expired in late 2024, and negotiations had been ongoing for months.) This is the second postal union contract settled recently the National Postal Mail Handlers Union also approved a contract earlier indicating a period of labor stability at USPS. For current postal employees (who are federal employees in a separate personnel system), the tentative deal likely means secured wage increases and preserved benefits through September 2027, pending union ratification.

Issues That Affect Retired Federal Workers Retirement Claims Backlog and Processing Reforms: The influx of federal retirements surged unexpectedly this spring, straining the Office of Personnel Management’s processing capacity. OPM received 15,048 new retirement claims in May 2025, an unseasonably large number that far exceeds May totals in recent years.

As a result, OPM’s retirement claims backlog jumped by 33% in one month, rising from about 16,100 pending cases at end of April to 21,483 cases at end of May. (For context, this backlog is nearly as high as the peak seen each January, when retirements typically spike.) The unusual surge is likely driven by the ongoing reorganization efforts and voluntary early-out offers prompting more employees to retire.

In response, OPM has just rolled out a new fully digital retirement application system aimed at speeding up processing. As of June 2, all federal agencies must submit retirement paperwork electronically via OPM’s Online Retirement Application (ORA) platform, and OPM will no longer accept paper retirement packages. OPM announced it successfully migrated over 400 million personnel records to a new electronic Official Personnel Folder system as part of this overhaul.

The modernized system lets staff process cases online (no more shipping paper folders) and includes a more user-friendly interface for reviewing files. The goal is to dramatically reduce the infamous backlog and shorten processing times (which currently average about 2 months). If the new digital process works as intended, retiring federal workers should see faster annuity adjudications and fewer delays in getting their pension payments.

OPM’s push to automate retirement processing actually began in the prior administration, but it has accelerated under the Department of Government Efficiency’s oversight. Bottom line for recent and soon-to-be retirees: expect improvements in how quickly your retirement claim is handled, though OPM is still digging out from May’s large volume. Social Security Fairness Act Implementation: A significant new law benefiting many federal retirees is now being implemented.

In January 2025, President Biden signed the Social Security Fairness Act, which repealed the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) two long-criticized rules that reduced Social Security benefits for those who also receive a government pension (such as CSRS retirees) or spousal benefits from such retirees. As of mid-2025, the Social Security Administration is well underway in adjusting benefits and issuing back payments under the new law.

About 3.2 million affected retirees are entitled to benefit increases, including retroactive payments for benefits since January 2024 (when the repeal took effect). By late May, SSA reported it had processed over 2.5 million retroactive payments to retired teachers, police, federal employees and others who had been “locked out” of full benefits due to WEP/GPO. This represents roughly 90% of the cases, with the remaining complex cases to be completed by the end of 2025.

Many CSRS retirees (who spent careers not paying into Social Security) are seeing their Social Security checks increase, in some cases by hundreds of dollars per month, now that the WEP penalty is gone. Spouses and widows of federal retirees are likewise now eligible for full Social Security survivor benefits without the GPO offset.

SSA’s guidance says most beneficiaries should have received a one-time lump sum by the end of March for retroactive amounts, and higher monthly payments began in April. Those who haven’t seen an expected adjustment can contact SSA, but the vast majority have been automated. This is a long-awaited change the culmination of decades of lobbying by retiree groups and it substantially boosts retirement income for affected federal annuitants.

Note: These changes do not affect the basic civil service pension; they only increase Social Security benefits for those who earned them. Retirees who spent part of their careers in Social Security-covered employment (or who are entitled to Social Security via other non-federal jobs) should review their new benefit statements to understand the increases.

2026 COLA Predictions and Inflation Trends: Though the next cost-of-living adjustment for federal retirees won’t be official until the autumn, early indicators are emerging. The COLA for 2025 (received this January) was 2.5%, reflecting cooling inflation compared to the big 8.7% bump in 2023. So far, inflation in 2025 has remained moderate.

The Consumer Price Index for Workers (CPI-W), which is the basis for federal retirement and Social Security COLAs, was up about 2.2% over the 12 months through May. If that trend holds, the COLA payable in January 2026 would be modest. The Senior Citizens League, a retirees’ advocacy group, released a projection of roughly a 2.4% COLA for 2026 based on the latest data. This is only a rough guess the actual COLA will be determined by CPI-W averages in July, August, and September.

As of now, it appears 2026’s adjustment will be in the low-2% range, assuming inflation doesn’t accelerate in the coming months. It’s worth noting that FERS retirees (who make up about 44% of federal annuitants) receive COLAs that can be slightly reduced if inflation exceeds 2%. In other words, if the COLA calculation comes out above 2%, FERS COLAs are capped at 2% or CPI-W minus 1%, depending on the level. But with current inflation levels, that likely won’t come into play this year.

All retirees will likely get the full CPI-based COLA. Meanwhile, Social Security beneficiaries are on track for a similar COLA in 2026 (since the Social Security COLA is identical to CSRS COLA and based on the same index). We will know more after the summer and in mid-October, the 2026 COLA will be formally announced by the Labor Department. Retirees should plan for a modest increase, and keep an eye on energy and food prices which could still sway the final number.

Overall, the post-pandemic inflation spike has abated, leading to more typical COLA adjustments that help maintain purchasing power without the extremes of the past couple years. Each of these developments from early June 2025 carries implications for federal employees and retirees. Legislative proposals in Congress could reshape benefits and job protections if enacted, so many in the federal community are watching the progress of the budget bill and related reforms closely.

At the same time, executive actions and court decisions are actively changing the landscape from how federal agencies manage their workforces (telework, discipline, staffing levels) to how retirees receive earned benefits (pensions, Social Security, COLAs). Current federal workers should stay informed about potential changes to their pay, rights, and workplace policies, while retired employees should take note of benefit updates that may affect their income.

This week’s news underscores the dynamic nature of federal employment whether you’re still on the job or enjoying retirement, staying abreast of policy changes is key. The Federal employee community, through its unions and associations, continues to advocate vigorously on these issues. We will continue to provide updates on any new developments impacting pay, benefits, and the wellbeing of federal workers and retirees. And that’s a wrap on this week’s 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. We’ll be back next week to track the latest developments and what they mean for you. Until then, stay engaged and be well.