The FED Weekly

Lawrence: Welcome to The FED Weekly for
14 - 20 September 2025, your essential

weekly briefing on the policies
and proposals shaping your career,

your benefits, and your retirement.

Whether you’re 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 Looming Government Shutdown:
A Standoff in Washington

The most significant news story
for the entire federal workforce

this week is the intensifying
threat of a government shutdown.

As the September 30, 2025,
deadline for agency funding rapidly

approaches, Congress remains far
from reaching a final agreement on

most full-year appropriations bills.

This has created a widespread sense of
anxiety among federal employees across

the nation, who are now adjusting
their personal and professional

lives to prepare for the potential
disruption to their public service

and the threat to their paychecks.

Instead of a long-term solution,
Republicans and Democrats are locked

in a standoff over competing versions
of a short-term funding bill,

known as a continuing resolution.

On September 16, 2025, House Republicans
put forward a seven-week stopgap

measure that would keep federal
agencies open through November 21, 2025.

This bill was described as "clean" and
free of "poison pills" but was notably

drafted and introduced without negotiation
with their Democratic colleagues.

In contrast, the Trump administration
is calling for a longer, four-month

continuing resolution that would extend
funding through January 31, 2026.

The fundamental disagreement here
is not just about the length of the

funding bill but about strategic timing.

The recurring cycle of brinkmanship
in Washington reveals a deep partisan

divide where legislative efforts
are often a high-stakes gamble.

The Republican proposal for a shorter,
seven-week measure could be a tactic

to maintain leverage and force a
quick resolution before the end of

the year, while the administration’s
and Democrats’ call for a longer

resolution may be a strategy to push
the deadline past the new year and avoid

negotiations in the pressure-cooker
environment of the late fall.

This constant uncertainty erodes the
stability of the federal workforce,

creating a climate of recurring
anxiety that can have a long-term

psychological toll on federal employees.

While a government shutdown directly
impacts the pay and duties of current

employees, its effects can also
ripple into the retiree community.

Although retirement annuity payments
are generally protected, a prolonged

shutdown could delay administrative
functions at agencies like the Office of

Personnel Management (OPM), potentially
impacting the processing of new

retirement applications or delaying
service requests for current annuitants.

A Proposed 2026 Pay Raise with a Catch

In a development that will impact
the financial well-being of both

current employees and future retirees,
President Trump issued an alternative

pay plan for 2026 on August 31, 2025.

This proposal would give the vast
majority of federal employees a 1% pay

increase, with locality pay frozen.

However, the plan is not uniform.

A significant and targeted
exception has been made for

certain federal law enforcement
officers, who could receive a 3.8%

base pay increase to align
with expected military raises.

The Office of Personnel Management
has been tasked with determining

which specific categories of
federal law enforcement employees

will receive this larger increase.

This proposal arrives at a time when
several law enforcement agencies are

planning to surge hiring, particularly
for immigration enforcement.

This segmented pay plan reveals a
strategic prioritization of specific

roles within the federal government,
which could create a potential for

internal division and morale issues.

The vast majority of the workforce
would receive a significantly

smaller pay increase than a
select group of their colleagues.

For current employees, this directly
impacts their take-home pay.

For retired federal workers, this
issue has a lasting effect because

retirement annuities for both the
Federal Employees Retirement System

(FERS) and the Civil Service Retirement
System (CSRS) are calculated based on

an employee’s "high-3" average salary.

A smaller-than-expected pay increase in
2026 directly suppresses this average,

leading to a smaller annuity for
those who retire in the years to come.

OPM’s Annual Combined Federal
Campaign and a Hint of Its End

The Office of Personnel Management
(OPM) has officially launched its

annual Combined Federal Campaign
(CFC), which is scheduled to run from

October 1 through December 31, 2025.

The CFC is a charitable giving
program that has been a long-standing

tradition within the federal
government for more than six decades.

However, a key detail emerged on
September 16, 2025, when a report in

FEDweek noted that OPM hinted that
this might be the final year the

government conducts the charity drive.

The potential end of this program
signifies a broader trend of evaluating

and potentially dismantling long-standing
federal programs and traditions.

For a workforce and retiree community
that values a sense of stability

and institutional legacy, this hint
of a change represents a subtle

but significant signal of a new
approach to government operations.

It can be seen as part of a larger,
ongoing effort to reshape the culture and

function of the federal government itself.

Issues That Affect Retired Federal Workers

Thrift Savings Plan
Performance: An August Rebound

For those who rely on the Thrift
Savings Plan (TSP) for their

retirement income, there is positive
news to report from August 2025.

All TSP funds finished the month in the
black, with international investments (the

I Fund) in particular rebounding after
lagging behind other portfolios in July.

This follows a mixed performance in
July, when domestic investments in

the C and S Funds posted gains while
the international (I) and fixed income

(F) funds ended the month in the red.

This recent mixed performance
underscores the critical importance of

a diversified investment strategy for
retirees and those nearing retirement.

The volatility of international
markets, as seen in the I Fund's

up-and-down performance from July to
August, highlights a major risk for

retirees whose ability to recover
from market downturns is limited.

This latest data shows that
retirement planning isn't a one-time

event but a continuous process of
monitoring and adjustment, especially

in a dynamic economic climate.

These trends highlight the
value of looking beyond U.S.

stocks, as international markets may
offer better risk-adjusted returns and a

way to add stability to a portfolio that
has become highly concentrated in U.S.

technology companies.

Maximizing Your Retirement:
A Guide to Timing Your Exit

A crucial resource for those
planning their retirement in

2026 was published this week.

Tammy Flanagan, an expert on federal
benefits, released her annual guide

titled "Step into retirement on the
right day" on September 18, 2025.

This guide provides vital information to
help employees maximize their retirement

benefits and navigate the complex process
of separation from federal service.

One of the most important pieces of
advice is to time your retirement

date to maximize the lump-sum payment
for your accrued annual leave.

For most federal employees, the 2026
leave year begins on January 11, 2026,

and concludes on January 9, 2027.

By retiring near the end of the
leave year, an employee can ensure

they receive payment for the maximum
amount of leave carried over from

the previous year, in addition to the
leave accrued in the current year.

The guide also emphasizes the importance
of the application process itself.

It is recommended that employees
notify their Human Resources specialist

at least 30 to 90 days in advance
of their planned work stoppage.

This provides enough time to complete
the Online Retirement Application

(ORA), which must be finalized by
the employee, the Human Resources

office, and the payroll provider before
it is sent to OPM for processing.

The guide warns that retirement
processing can take several months if

the employee has certain complicating
factors, such as court orders, workers'

compensation claims, or a history of
part-time or intermittent federal service.

The fact that an entire guide is
dedicated to this topic and mentions

specific dates and deadlines reveals
the bureaucratic intricacies of

the federal retirement process.

A single mistake, such as retiring
on the wrong day, could cost an

employee a significant amount of
money in lost leave and benefits.

Issues That Affect Current Federal Workers

Efforts to Restore
Collective Bargaining Rights

For current federal workers, a new
legislative effort is underway to

safeguard their job protections.

On September 18, 2025, Virginia Senator
Mark Warner introduced the "Protect

America's Workforce Act," a bill backed
by the American Federation of State,

County and Municipal Employees (AFSCME).

This legislation is a direct response
to a fundamental challenge to labor

rights within the federal government.

The bill aims to block President
Donald Trump's March executive

order, which stripped collective
bargaining rights from hundreds

of thousands of federal employees.

According to AFSCME President Lee
Saunders, the bill would allow federal

workers to regain their voice on the job
and collectively bargain for safe working

conditions and strong public services.

This bill has bipartisan support
and is a companion measure to a

bill introduced in the House by
Maine Representative Jared Golden.

The legislative action is not just a
partisan issue but a broader debate

about the nature of civil service and
the rights of the federal workforce.

The use of strong language by
the bill's sponsors, who describe

the administration's actions as
"terrorizing the federal workforce,"

suggests a highly contentious
environment where job protections

are actively being fought over.

The Legal Battle Over
Federal Job Protections

The debate over federal employee
rights is not limited to Congress.

A profound legal challenge is
currently being waged by the Justice

Department, which is arguing before
the Merit Systems Protection Board

(MSPB) that the President has the
constitutional authority to fire federal

employees "at will" and without cause.

This legal argument directly challenges
decades of precedent and current

federal law, which require agencies
to provide notice, cause, and an

opportunity to rebut allegations
before a firing can take place.

The administration’s aggressive dismissal
of career staff, including the top pardon

attorney in March 2025, demonstrates that
this is not a theoretical argument but an

active strategy to reshape the workforce.

If the administration were to succeed in
this legal effort, it could effectively

dismantle the protections that have
insulated career civil servants from

political retribution for decades.

This would fundamentally alter
the federal workforce, potentially

replacing a merit-based system
with one where employment is

contingent on political loyalty.

The ongoing legal battles on multiple
fronts highlight a multifaceted campaign

by the administration to redefine
the nature of federal employment.

VERA and Deferred Resignation:
A Looming Deadline

For a select group of current
federal employees, a time-sensitive

deadline is rapidly approaching.

The deadline for the deferred resignation
offer and the Voluntary Early Retirement

Authority (VERA) is September 30, 2025.

This program is available to employees
who are eligible for the offer and

are at least age 50 with 20 years of
creditable federal service, or any age

with 25 years of creditable service.

The program offers a unique
window of opportunity for

those considering retirement.

A critical provision allows
eligible employees to accept a

deferred resignation and still
elect for early or normal retirement

before the September 30 deadline.

If a retirement election is made, it
will override the deferred resignation.

During the deferred resignation
period, employees will continue

to accrue retirement benefits.

For those who are scheduled to retire
after September 30 but before December

31, 2025, they are still eligible
for the program, and their deferred

resignation date can be extended to
match their approved retirement date.

This news serves as a direct call
to action for any federal employee

considering retirement, underscoring
the need to act swiftly and navigate

the bureaucratic process with precision.

A separate retirement application must
still be submitted, and it is important

to note that an employing agency can
deny a request to rescind a resignation,

as the program's objective is to
quickly consolidate or reassign roles.

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.

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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.