The FED Weekly 29 Jun - 5 Jul 2025 (Episode 5)

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 In this period the biggest development was on Capitol Hill. Both the House and Senate were working on H.R.1 (the “One Big Beautiful Bill” budget reconciliation package).

Early reports noted that the House-passed version included several proposed cuts to federal retirement and health benefits for example, eliminating the FERS annuity supplement for most early retirees and switching annuity calculations from a “high-3” to a “high-5” salary basis However, the Senate parliamentarian later ruled those provisions out of order under Senate rules, and by June 29 media reported that the Senate’s version contained no cuts to current workers’ or retirees’

earned benefits or union rights. The Senate package was pared down to non-controversial items (an audit of FEHBP enrollment and budget efficiency initiatives) with all contested pension and pay cuts dropped. Retired and active employees alike cheered the outcome.

The National Active and Retired Federal Employees Association (NARFE) noted on July 1 that “no federal workforce provisions opposed by NARFE made it into the final [Senate] version” of H.R.1. NARFE President Bill Shackelford called this “a huge victory” for workers and retirees, emphasizing that cuts to vested pension benefits and FEHB had been blocked.

As enacted and signed into law, current feds and annuitants will see their existing retirement and health benefits preserved a dramatic reversal from what had been in earlier drafts. Aside from the budget bill, one legislative change of note affecting federal retirees went into effect earlier this year. The Social Security Fairness Act (H.R. 82) was signed into law January 5, 2025, and repealed the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO).

In practice this means over 2.8 million workers including many Civil Service Retirement System (CSRS) retirees will see higher Social Security checks beginning in 2025. The Social Security Administration reports that affected retirees started receiving the new, higher benefits in the spring, with backpay to January 2024 already disbursed. On the investment side, federal employees’ retirement savings did well in June. Thrift Savings Plan (TSP) funds all rose in value last month.

The S Fund (small- and mid-cap stocks) surged 5.40% in June, bringing its 2025 gain back into positive territory, and the C Fund (large U.S. stocks) was up 5.08%. Bond-like funds (F and G) also gained modestly. Even those close-to-retirement “L Funds” saw gains (e.g. the L Income Fund +1.57%, and all L Funds +3–4%). These robust returns in June should help preserve the value of TSP balances for current employees and retirees alike. Legislative summary (affecting all feds): H.R.

1 (One Big Beautiful Bill Act) A budget reconciliation package in Congress. The House had originally included provisions cutting federal retirement benefits (e.g. eliminating the FERS supplement, moving to “high-5” salary) and raising pension contributions for many workers. The Senate’s version (passed July 1) removed all such cuts to current or retired employees.

As enacted, the law does not reduce any earned annuities or benefits for current feds or retirees (the FERS supplement cut is delayed to 2028, with current employees already vested exempted). This outcome means both working and retired federal staff avoid the drastic benefit changes that were in the earlier House proposal.

In practical terms, active feds and annuitants should see no change to their current retirement annuities or FEHB benefits from H.R.1, and many CSRS retirees will receive higher Social Security checks under the fairness act. Issues That Affect Current Federal Workers Workforce and hiring: Job-seekers and employee movement remain active topics. Government Executive reported July 1 that after a surge in early 2025, the rate of federal workers applying to other jobs has “leveled out” in May.

Data from Indeed showed that job applications by federal workers grew ~150% from January to April 2025, particularly in agencies targeted for cuts, but then fell 4% in May. The analyst attributed the May decline to hiring uncertainties and “deferred resignations” (programs letting employees postpone departure until fall), as well as tightening openings at major contractors (which saw 15% fewer postings YTD).

In short, current feds may find fewer outside opportunities, and some are delaying leaving federal service for now. On July 2 Government Executive reported a significant stall in pay for non-supervisory DoD workers. When Defense Secretary Hegseth abruptly shut down all DoD advisory committees, it indirectly froze the Federal Wage System (blue-collar) pay adjustments.

Over 60,000 wage-grade feds (across 87 of 248 wage areas) are now waiting for their 2025 pay raise, because the wage adjudication panels can’t meet without those committees. This freeze affects about 30% of all wage-grade federal employees nationwide. As the article notes, federal law requires annual pay adjustments for these workers, so the delay means tens of thousands of DoD blue-collar employees are essentially on pay-hold until the committees are reconstituted.

DoD says it plans to fix the process, but meanwhile the affected workers have had their raises postponed well into the year. Another personnel issue arose with OPM guidance on hiring. Government Executive reported July 3 that the Office of Personnel Management quietly told agencies to stop heavily weighting the politically-charged “favorite Executive Order” essay question in federal applications.

OPM’s internal memo said answers to those questions “are not scored or rated” and should be treated as optional effectively rescinding an earlier plan to use them as a qualification screen. The change came amid legal challenges that the questions amounted to an ideological litmus test. The Public Employees for Environmental Responsibility (PEER) group praised OPM’s “retreat” from what they called an “illegal screening tactic”.

For current job applicants, this means that agencies will not use the controversial essay on allegiance to the President as a factor in hiring decisions. Union rights and collective bargaining: On July 5 Reuters reported a major court decision on federal unions. A federal judge (Thomas Donato in New York) permanently blocked President Trump’s 2023 executive order that sought to end collective bargaining at most federal agencies.

Donato’s ruling applied to seven agencies (Justice, Treasury, HHS, etc.) plus five more (VA, Agriculture, State, Labor, etc.) that had been added. He found the order was essentially a retaliatory move against unions for opposing Trump’s policies. Unions cheered the verdict: AFGE President Everett Kelley called the blocked order a “retaliatory attempt to bust federal unions”. The White House said it would appeal.

In effect, current federal employees in nearly all agencies will continue to have union representation and bargaining rights intact, despite the administration’s earlier attempt to revoke them. Legislation affecting current employees: Aside from the budget bill discussed earlier, another bill in Congress is aimed mainly at active workers. The Federal Retirement Fairness Act (H.R. 1522) was reintroduced February 24, 2025, with strong bipartisan support.

This act would help employees (especially Postal Service letter carriers and similar noncareer staff) by allowing them to purchase service credit in FERS for time they worked in non-career jobs (like casual or transitional posts) after 1988. In practice, it lets people whose careers began in low-grade or part-time roles (but doing the same work) count that time toward their pensions.

NALC union leaders highlight that more than 132,000 letter carriers did not get retirement credit for such periods, so H.R.1522 would let them “buy” that missing service. (The bill has 24 cosponsors and mirrors a prior version that had 131 bipartisan backers last Congress.) If passed, this law would benefit current workers by boosting their future annuity amounts; there is no effect on those who are already retired.

The Federal News Network noted that Department of Government Efficiency actions continue to ripple through the workforce. For instance, the blocked Defense RIFs (above) stem from DOE’s RIF orders being tied up in court. The Federal Reduction Tracker (a special ongoing report) shows many RIF actions remain enjoined. Meanwhile, one data point from Indeed suggests moderate hiring activity at agencies targeted for cuts.

It remains a fluid situation: current employees are watching for any new reduction-in-force or reorganization plans (for example, USAID faced proposals to eliminate it), and many have delayed retirement through the Deferred Resignation Program. Overall, though, the news this week on personnel policy has been largely favorable to current feds the administration’s big cuts have been halted by courts or Congress, and even pay proposals have avoided immediate harm.

Issues That Affect Retired Federal Workers Retired federal employees have been mostly spared negative developments this week. As noted above, H.R.1 ultimately removed all cuts to retiree annuities. The enacted version preserves retirees’ earned benefits and does not change current annuity formulas. In plain terms, current annuitants will continue receiving the same pension amounts they had before.

One legislative item of special relevance to retirees is the recently-enacted Social Security Fairness Act (H.R.82). Although it passed earlier this year, its effects are only now being felt. Under H.R.82 the WEP and GPO penalties were removed, meaning many CSRS retirees are getting higher Social Security checks this year. This change takes hold retroactively to 2024, and affected retirees began seeing the results in spring 2025 (with back-pay).

This law benefits some federal retirees by substantially increasing their Social Security income. Another administrative development could help retirees eventually: the modernization of OPM’s retirement system. Although announced last spring, it will roll out in 2025 and should speed retiree processing. The Office of Personnel Management has mandated that by July 15, 2025, all new retirements be submitted electronically.

In theory, moving to a fully digital application will cut the current backlog (which can run several months) and deliver final annuity calculations faster. NARFE noted this could “cut back on burdensome delays for federal retirees awaiting their full retirement annuities”. It remains to be seen if the new system will fully eliminate processing lags, but it is a positive step for those already retired or about to retire.

On the benefits front, no news arose this week about FEHBP or COLAs for retirees (the next federal COLA will be announced in late 2025). Retirees should note that health insurance rules remain stable: those who met the 5-year FEHBP vesting rule at retirement continue to have premium support (about 72% government share). And many retirees coordinate Medicare with FEHB, often with cost savings as Medicare becomes primary.

(For example, long-time FEHBP carriers encourage new annuitants to enroll in Medicare Part B once eligible, since Medicare pays first.) This week’s news did not change any of those facts. One current issue involves surviving spouses. Federal annuities for survivors will continue to be deducted for FEHB or FEGLI premiums as before.

(If a retiree was carrying family FEHB, a surviving spouse must keep FEHB or convert to self-only.) There were no new proposals to alter survivors’ or widows’ benefits this week. In summary, retirees continue to receive COLAs, FEHBP, and Social Security under the old rules, and the Social Security Fairness Act is increasing checks for many.

The major legislative fights this period all focused on current employees’ future benefits; for now, retirees’ hard-earned pensions and insurance remain intact. 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.