The FED Weekly 8-14 June 2025 (Episode 2)

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.

Issues That Affect Current and Retired Federal Workers Budget Reconciliation and Retirement Benefits: A major budget package, the One Big, Beautiful Bill Act (H.R. 1), is advancing through Congress with provisions targeting federal employee benefits The House narrowly passed H.R. 1 on May 22, and Senate committees unveiled their draft on June 12 Notably, proposals that would directly cut already-earned retirement benefits have been softened in the latest version.

For example, the House’s initial plans to shift pension calculations from a “high-3” to “high-5” salary average and to raise all current employees’ pension contributions to 4.4% were removed before final House passage Likewise, the Senate draft dropped the House’s provision to eliminate the FERS annuity supplement (a Social Security bridge for those retiring before 62) Federal retiree advocates welcomed this retreat as NARFE’s John Hatton noted, lawmakers should not “cut back

on vested benefits that are based on earnings from previous work” However, other long-term changes remain on the table. Both House and Senate versions would require newly hired federal employees to pay significantly more toward their pensions if they want to retain civil service protections.

Under the Senate plan, new hires must contribute 9.4% of pay to FERS, or a steep 14.4% if they opt to keep their Title 5 job protections This two-tier choice essentially “pay extra for your rights or become at-will” has alarmed observers who say it could undermine the entire retirement system’s viability for the next generation NARFE warns that forcing exorbitant contributions could make the benefit “not even a bang for your buck,” discouraging younger employees from staying in the

system Health and Legal Protections: Other provisions in the reconciliation package affect both current workers and retirees. One item would impose a $350 fee for appeals to the Merit Systems Protection Board (MSPB), payable by employees, former employees, or applicants who challenge personnel actions (The fee would be refunded if the appellant wins.) This aims to deter frivolous cases but has drawn fire from employee groups as a barrier to due process.

Another section requires agencies to audit Federal Employees Health Benefits (FEHB) enrollments to remove ineligible family members Unlike the benefit cuts, this FEHB audit idea has seen little opposition with GAO estimating nearly $1 billion per year is spent on ineligible dependents’ health coverage Audits would apply to all enrollees’ family plans, meaning current workers and retirees could be asked to verify dependents’ eligibility.

No immediate changes to core FEHB benefits or premiums are proposed, but tighter enforcement could affect those covering spouses or children who don’t meet eligibility rules. Legislative Status: As of June 14, the Senate Homeland Security and Governmental Affairs Committee was marking up its portion of the bill, eyeing a July 4 deadline to finalize the reconciliation package If the Senate passes a version, negotiations with the House will follow.

Federal unions and retiree groups are lobbying intensely during this window. They achieved some success in getting certain benefit cuts removed for instance, the “high-5” pension formula change was struck from the House bill after bipartisan pushback But they remain vehemently opposed to what remains.

“This so-called reconciliation bill is in fact a big retaliation bill,” said AFGE President Everett Kelley, “a direct assault on federal employees and their labor unions” that would slash take-home pay and obliterate workplace rights NARFE President William Shackelford vowed “to keep fighting until all of this bill’s onerous provisions directed at federal employees and retirees are removed” In sum, both current employees and retirees have a stake in this fast-moving budget

legislation it carries long-term implications for pension formulas, early retirement supplements, and the merit system itself. Issues That Affect Current Federal Workers Civil Service Protections and Workforce Rights: The ongoing budget reconciliation fight has particularly high stakes for current federal employees’ working conditions. Provisions in H.R. 1 would fundamentally alter the civil service framework for new hires effectively introducing an at-will employment system.

Under the Senate’s draft, all new federal hires would be hired as at-will unless they pay an extra 5% of salary into FERS (on top of an already higher base contribution) Choosing not to pay means surrendering civil service due process rights and being terminable “for good cause, bad cause, or no cause at all.” Employee groups argue this is a backdoor way to revive “Schedule F”-style political purges.

Rep. Stephen Lynch (D-MA) called the plan a “backdoor” for Schedule F that would enable partisan mass firings of nonpartisan staff NARFE likewise warned it sets a dangerous precedent by taxing those who retain merit protections essentially a 5% pay penalty and could discourage agency talent Unions are uniformly opposed.

AFGE’s Kelley said the plan would “make it that much harder for agencies to recruit and retain qualified employees” by stripping workplace rights The American Federation of Government Employees (AFGE), National Treasury Employees Union (NTEU), and others also blasted a suite of anti-union measures folded into the Senate bill.

These include a 10% surcharge on union dues paid via payroll deduction and a mandate that unions reimburse agencies for official time (hours spent on representational duties) or face debarment NTEU President Doreen Greenwald described such proposals as “punitive…union-busting” noting they would “slash the take-home pay for newly hired civil servants” without improving benefits, while hampering unions’ ability to represent workers In sum, current federal employees face a potential

future where new colleagues have fewer rights and unions are financially squeezed. Executive Actions on Firing and Reorganization: Outside of Congress, the executive branch is pursuing its own workforce reforms. The Office of Personnel Management (OPM) issued a proposed rule on June 2 to expedite removals of federal employees for “suitability” issues (e.g. misconduct or failing to meet background standards).

The rule titled “Improving Performance, Accountability and Responsiveness in the Civil Service” would allow agencies to fire employees who no longer meet requirements in as little as 5 working days, with greatly limited appeal rights OPM plans to apply to current employees the same rigorous suitability adjudications that previously applied only to new hires This means a worker deemed “unsuitable” could be terminated almost immediately, with MSPB jurisdiction curtailed.

The Trump administration argues this will rid agencies of problem employees faster. However, federal employee advocates strongly object.

NARFE submitted formal comments on June 6 opposing the rule, arguing it would “pave the way for this and future administrations to remove competent, nonpartisan civil servants and replace them with political cronies” In other words, critics see it as an attempt to erode 140 years of merit-based civil service protections by making career staff easier to dismiss for subjective reasons.

This controversy echoes the broader theme of the budget bill’s at-will employment provisions together signaling a significant shift in how secure a federal career might be. Meanwhile, Congress is weighing a dramatic expansion of executive authority to reshape agencies. The Senate HSGAC’s draft would give the President broad, fast-track powers to reorganize and downsize federal agencies.

It earmarks $100 million for the Office of Management and Budget (OMB) to implement agency restructuring plans over the next decade Critically, the bill would exempt the President from many current laws that require congressional approval for reorgs, allowing sweeping changes “without obstruction” from Congress or even the courts This comes as the administration has faced legal injunctions blocking its agency reductions-in-force (RIFs).

(Federal courts recently enjoined agencies from carrying out RIFs and reorgs that lacked explicit congressional sign-off Lawmakers are effectively debating whether to override those court orders by statute.

A federal judge warned on June 9 that her injunction against unilateral agency cuts will stand, but “whatever Congress says can happen going forward, can happen” “all bets are off” if lawmakers authorize the reductions If enacted, this would mark the return of authority not seen since the 1980s, when presidents last had carte blanche reorganization power For current feds, it could translate to accelerated agency consolidations or closures and the elimination of positions with minimal

congressional oversight. The bill even encourages workforce slimming by establishing a “bonuses for cost-cutters” program offering cash awards up to $10,000 to employees who identify wasteful spending that gets cut While incentivizing thrift, the overarching aim is clearly a leaner federal workforce. Mass Layoffs and Agency Funding Battles: Federal employees are also confronting the reality of agency-level job cuts.

This week saw moves in the House Appropriations Committee to green-light deep workforce reductions at two of the government’s largest departments.

On June 12, a House panel approved the FY2026 Defense spending bill with funding trims corresponding to the Pentagon’s plan to eliminate ~45,000 civilian jobs (about a 5–8% cut) The same day, in drafting the VA’s budget, House Republicans rejected an amendment to halt the Department of Veterans Affairs’ plan to fire around 80,000 employees That VA downsizing aimed at returning to 2019 staffing levels is part of an aggressive reorg that the VA, with help from the Department of Government

Efficiency, intends to carry out by the end of summer. Veterans’ groups and unions have decried the cuts as harmful to veteran services, and Democrats call it a betrayal of promises to veterans Nonetheless, the House’s draft VA appropriations bill did not intervene to stop the layoffs. In effect, lawmakers signaled support for the administration’s workforce reduction agenda at VA and DoD.

The message to current federal workers is sobering: thousands of positions are on the chopping block as agencies “streamline.” AFGE, which represents 311,000 VA employees, warns that veterans and the public will “suffer unnecessarily” from these cuts But VA leadership, backed by the White House, asserts that the government’s purpose is to serve citizens, not to employ people even if that means painful decisions Expect continued debate as these spending bills advance, but for now,

Congress is largely aligning with the push to shrink the federal workforce. Pay and Benefits Updates: Amid these challenges, there was at least some focus on pay. The White House’s budget outline for FY2026 proposed no general pay increase for civilian federal employees effectively a pay freeze next year.

This is part of $163 billion in proposed spending cuts that unions say will “destroy government” services In response, lawmakers have introduced the Federal Adjustment of Income Rates (FAIR) Act, which NTEU and other unions endorse, calling for an average 4.3% pay raise in 2026 for federal workers The FAIR Act represents the workforce’s hope to keep salaries competitive as inflation and private-sector wages rise.

It’s still early in the budget process, and ultimately Congress will set the pay raise (if any) later this year. On a positive note for employees, military service members are slated for a 3.8% raise in 2026, and House appropriators indicated civilian pay might be revisited once full budget details arrive Additionally, some unions are securing wins through bargaining.

This week, one of the Postal unions the National Rural Letter Carriers’ Association (NRLCA) ratified a new collective bargaining agreement through May 2027, with annual wage increases and semiannual COLAs for rural carriers The American Postal Workers Union (APWU) also mailed out ballots for its tentative 3-year contract, touting no-layoff protections and multiple pay improvements achieved even in today’s challenging climate These developments don’t apply to most federal employees directly

(since USPS has separate labor agreements), but they show unions still negotiating hard-fought gains. In summary, current federal workers face a wave of changes from legislation that could alter their rights and retirement prospects, to executive efforts to speed up firings, to budget-driven job cuts all while fighting for fair pay and maintaining the ability to serve the public effectively.

Issues That Affect Retired Federal Workers Social Security Windfall Elimination Provision (WEP) and GPO Repeal: Retired federal employees received momentous news earlier this year, and updates continued this week.

In January, President Biden signed the Social Security Fairness Act into law, which repealed the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) effective January 2025 WEP and GPO had long reduced Social Security benefits for many federal retirees particularly CSRS pensioners with some Social Security credits, and those receiving spousal Social Security benefits. The repeal means retirees affected by those provisions are now entitled to full benefits going forward.

By late February and March, the Social Security Administration (SSA) had adjusted most beneficiaries’ accounts, issuing retroactive payments to compensate for January’s higher benefit amounts During the week of June 8–14, SSA provided a fresh update on the WEP/GPO implementation.

In a communication on June 9, SSA outlined what retirees should expect: when increased payments will arrive, how Medicare Part B premiums deducted from Social Security will be handled, tips to avoid scams, and information on any back payments still due This update is important for federal annuitants (and their survivors) to understand the practicalities of their new Social Security benefits.

Not everyone has found the process seamless NARFE has pressed SSA to extend retroactive payouts to all who are entitled. The agency currently uses a six-month “lookback” for GPO applicants, which NARFE argues is insufficient.

Many widows/widowers never applied for Social Security due to GPO reducing it to zero dollars, and NARFE’s June 6 letter urges that they should receive full back benefits regardless of when they now apply This advocacy is ongoing, but the bottom line is that federal retirees are finally seeing relief from WEP and GPO, correcting what NARFE and bipartisan supporters long saw as unfair penalties on earned benefits.

Federal Pension and COLA Protections: Apart from Social Security, retired feds have kept a close eye on the budget proposals because some provisions could indirectly affect them. The House’s reconciliation bill initially threatened to change how federal pensions are calculated (the high-5 vs high-3 issue) and to eliminate the FERS annuity supplement for future retirees As noted, those specific cuts are not in the current Senate draft thanks in part to vigorous opposition.

Had they advanced, they would have reduced the annuities of future retirees (and possibly even some recently retired folks).

For example, moving to a high-5 average salary would generally lower one’s computed pension potentially costing thousands over a retirement for those who peaked in their final three years Eliminating the FERS supplement starting in 2028 would have hit any FERS employees who retire before age 62, shrinking their income until Social Security kicks in "This bill would claw back part of the value of vested retirement benefits via elimination of the FERS supplement,” warned NARFE President

Shackelford, who also noted it could even retroactively hurt those taking early-outs in ongoing RIFs Fortunately for current retirees, those changes appear stalled for now and anyone already retired or eligible for the supplement before 2028 would be grandfathered under the House’s plan Nonetheless, NARFE and other retiree advocates remain on high alert. They have been rallying retirees to contact Senators and express strong opposition to any benefit cuts.

With the slim margins in Congress, even a few lawmakers changing stance could protect retirees’ pensions. The message from advocacy groups is that retired federal workers earned their benefits over decades of service, and balancing budgets should not come at the expense of those earned pensions and health benefits.

Healthcare and Other Benefits: Retired Feds share the FEHB health insurance program with current employees, so the aforementioned FEHB dependent audit initiative will include annuitants. While removing ineligible individuals (like ex-spouses who should have been taken off a family plan) is aimed at cost savings annuitants should be prepared to verify the status of covered family members during periodic audits.

On the bright side, there were no proposals to increase FEHB premiums for retirees or to limit plan choices this week. Likewise, the budget proposals do not target cost-of-living adjustments (COLAs) for federal pensions a relief, given that inflation has been a concern.

In fact, retirees under CSRS and FERS received substantial COLAs in January 2025 (8.7% for CSRS, 7.7% for FERS), and mid-year data suggest another significant COLA could be on the horizon for 2026 if inflation persists (though final numbers won’t be known until the fall). Notably, those COLAs were granted in full despite the administration’s cost-cutting environment a sign that retiree COLAs remain politically sensitive to alter.

One small COLA-related update: individuals on the Federal Employees Compensation Act (FECA) rolls (injured employees) got a 2.8% COLA in April 2025 which is separate from the pension COLA but of interest to some disabled federal retirees. OPM Retirement Services Modernization: A quieter but impactful development for future retirees is OPM’s push to modernize the retirement application process.

OPM announced it is transitioning to fully digital retirement processing, moving away from the old paper-based system that often caused delays As of June 2, 2025, federal agencies must submit new retirement applications and documentation electronically to OPM’s new online system, with paper submissions no longer accepted after July 15, 2025 OPM’s goal is to streamline and speed up pension adjudication currently a notoriously lengthy process averaging 3–5 months or more for new retirees.

The agency acknowledged that antiquated, fragmented systems have led to errors and backlogs, and stated that the new digital system will “fully address” these problems NARFE, which has long advocated for such modernization, welcomed this move. If the online retirement application (ORA) works as intended, it should reduce the waiting time for retirees to receive their full annuity payments However, OPM will need to prove it can implement the technology effectively.

Retirees and near-retirees should ensure their agencies are prepared to use the new system and that their records are accurate in the electronic pipeline. The coming months will reveal whether this innovation lives up to its promise of a smoother retirement claims experience. Retiree Advocacy and Outlook: Retired federal employees, through organizations like NARFE, remain deeply engaged in all these issues.

They recognize that today’s policy changes whether it’s the budget cuts to agencies, civil service rules, or benefits tweaks can affect the stability of their retirement and the services they rely on.

The good news is that retiree advocacy has shown results: the full repeal of WEP/GPO after decades of effort is a prime example of a victory Additionally, the removal of the high-5 pension formula proposal and preservation of COLAs demonstrate that retiree voices are being heard in the process Going forward, retirees will watch the final stages of the budget reconciliation like hawks. Any conference compromise will need to be scrutinized for impact on FEHB, pensions, and other earned benefits.

NARFE has encouraged its members (many of whom are retirees) to continue contacting legislators while the Senate deliberates In the words of NARFE’s advocacy team, “NOW is the time to act.” Retirees are also allied with active employees in this fight after all, protecting the civil service and its benefits today ensures the value of federal retirement tomorrow.

As this week’s news shows, whether it’s securing a long-sought Social Security fix or heading off a cut to pensions, staying informed and engaged is paying off for the federal retiree community. 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.