The FED Weekly

Lawrence: Welcome to The FED Weekly
for 28 September - 4 October 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 primary factors affecting both
current and retired personnel during this

critical week were the legislative failure
to fund the government and the final,

sweeping effects of the administration's
workforce realignment policies.

The week began with the looming threat of
a government shutdown, with funding set to

expire late Tuesday evening, September 30.

The legislative battle came to a head when
the Senate voted on the vehicle intended

to prevent the lapse in appropriations:

H.R.

5371, the Full-Year Continuing
Appropriations and Extensions Act, 2025.

This Continuing Resolution, or CR, aimed
to keep most federal programs funded

largely at the Fiscal Year 2024 levels
for the remainder of Fiscal Year 2025.

However, on Tuesday, September 30,
Senate Democrats rejected the measure,

ensuring the lapse in funding at midnight.

The vote of 55-45 fell short of
the 60 votes required to overcome a

filibuster and pass the legislation.

The political impasse
centered on health care.

Senate Democratic Leader Chuck
Schumer stated that Democrats would

not accede to the bill unless it
included an extension of expanded

Affordable Care Act (ACA) tax credits.

Republicans countered, calling the
rejected bill a "clean" measure that

should have been noncontroversial,
but the stalemate held.

This failure led directly to the Office
of Management and Budget issuing a

memo instructing agencies to "execute
their plans for an orderly shutdown".

The decision to allow the appropriations
lapse to occur based on a conflict over

broad national health policy, specifically
the extension of the ACA tax credits,

connects the fate of the federal workforce
to large political battles over general

entitlement and subsidy programs.

The consequence is that federal employees
and retirees, who rely on a functional

government for benefits and pay, become
collateral damage in disputes that

extend far beyond the scope of government
operations or appropriations alone.

The Great Exodus: The Deferred
Resignation Program Culmination

Simultaneously, the civil
service underwent the largest

single-year structural reduction
since the Second World War.

The week culminated in the formal
completion of the latest wave

of the Trump administration's
Deferred Resignation Program (DRP).

More than 150,000 federal workers
were formally set to quit on Tuesday,

September 30, in what was described as
the “largest mass resignation in U.S.

history”.

This mass departure forms a critical
pillar of the administration’s sweeping

effort to reduce the federal workforce,
which is projected to result in the

departure of approximately 150,000
employees through DRP, voluntary

separation programs, attrition,
and early retirement initiatives.

Employee reports cited months of "fear
and intimidation" and a feeling of

having "no choice but to depart" after
feeling that their agency's mission was

stripped away and job security dissolved.

The Deferred Resignation Program
represents a massive financial

outlay by the government.

According to a Senate Democrats’
report from July, the total cost

of the program was set at $14.8

billion, covering the full salary
and benefits for 150,000 workers

while they were on administrative
leave for up to eight months.

The administration justified this
significant one-time cost by claiming

it would lead to greater efficiency
and lower long-term spending.

The Office of Personnel Management
claimed the one-time expenses were

offset by lower longer-term spending,
projecting annual savings of $28 billion.

Furthermore, OPM openly criticized the
existing job protections for federal

civil servants, asserting that the
government required a “modern, at-will

employment framework like most employers”.

This critique confirms that the
administrative strategy is fundamentally

aimed at dismantling the protected
status of the career civil service.

The decision to invest billions
upfront to rapidly remove experienced

personnel illustrates that the political
objective of restructuring the workforce

quickly outweighed the short-term
financial efficiency of handling

separations through standard attrition.

This rapid, targeted removal is leading
to an accelerated drain of institutional

knowledge, a systemic cost of lost
expertise that is not quantified in

the projected annual savings of $28
billion but will inevitably impair the

efficacy of government functions relied
upon by the public and by retirees.

The combined political rhetoric and
administrative actions confirm that

the shutdown is being viewed not merely
as a temporary operational pause but

rather as an opportunity to intensify
and accelerate the permanent reduction

and restructuring of the civil service.

Legislative Focus on Benefits Integrity

Amidst the chaos of the shutdown and
mass departures, attention remained

on legislation aimed at tightening the
integrity of the Federal Employees Health

Benefits (FEHB) Program, which serves
both current employees and retirees.

H.R.

2193: The FEHB Protection Act of
2025 , introduced in the House

of Representatives, proposes
measures to improve accountability

within the FEHB program.

The Act mandates that the Director
of the Office of Personnel Management

(OPM) establish new regulations for
verifying qualifying life events that

permit an enrollee to add a family
member to their health benefits plan.

The goal is explicitly to confirm
that the individual being added

is a legitimate family member.

While this bill had no active movement
reported during the period of September 28

to October 4, its relevance is significant
because the FEHB program is the largest

employer-sponsored health benefits
program of its kind, covering nearly 8.3

million enrollees and dependents,
including a vast number of retirees.

Any legislation that strengthens
the integrity and long-term

financial stability of this core
benefit is crucial for both groups.

Issues That Affect Retired Federal
Workers: For the community of

retired federal employees, the
primary concerns during a lapse in

appropriations center on the security
and timing of their monthly income

and the anticipation of cost-of-living
adjustments for the coming year.

Annuity Security Amidst the Shutdown

The most important news for federal
retirees during the turmoil of the October

1 government shutdown was the confirmation
that their scheduled annuity payments

would continue without interruption.

Annuity payments for those under both
the Civil Service Retirement System

(CSRS) and the Federal Employees
Retirement System (FERS) are paid

from the Civil Service Retirement
and Disability Trust Fund (CSRDF).

Since this funding source is
categorized as mandatory spending and

does not rely on annual congressional
appropriations, it is fiscally

insulated from a lapse in funding.

Furthermore, the Office of Personnel
Management (OPM) staff required to

process and disburse these monthly
payments are classified as excepted

employees and continue to work during
the shutdown to maintain continuity.

Similarly, Social Security benefits,
including retirement and disability

income, are paid from dedicated
trust funds and are not impacted

by the appropriations lapse.

Therefore, while the active
federal workforce faced an

immediate financial crisis due to
furloughs, retirees maintained a

secure and reliable income stream.

This secure financial status for current
annuitants stands in stark contrast to the

anxiety that drove a significant spike in
retirement applications earlier in 2025.

Political rhetoric concerning changes
to benefits, even if those cuts were

ultimately excluded from enacted
legislation (such as the preservation of

the high-three salary calculation and the
Special Retirement Supplement for FERS

retirees) , proved sufficient to push
many employees into retiring prematurely.

This suggests that systemic instability,
rather than immediate financial danger

to the annuity, is enough to cause
the federal government to lose vital,

experienced human capital due to perceived
uncertainty, even if the retirement

checks themselves remain secure.

Forecasting the 2026
Cost-of-Living Adjustment (COLA)

Retirees also tracked the forecast for
the 2026 Cost-of-Living Adjustment,

which applies to Social Security
benefits and FERS/CSRS annuities.

As of the end of the reporting period
on October 4, analysts maintained a

strong consensus projection for the
2026 COLA to be approximately 2.7%.

This figure is derived from the latest
available inflation data, specifically the

August 2025 Consumer Price Index for Urban
Wage Earners and Clerical Workers (CPI-W).

For an average retired worker, a 2.7%

increase would translate to an increase
of about $54 per month, based on

average August 2025 benefit levels.

For those receiving Federal Employees’
Compensation Act (FECA) benefits, the

2026 COLA projection is also 2.7%,

applicable to cases where the death
or disability occurred more than one

year prior to the adjustment date.

While the projection is considered firm
based on data through August 2025, the

final official COLA number depends on the
release of the September CPI data, which

the Social Security Administration is
scheduled to announce on October 15, 2025.

A significant underlying concern for
retirees, even with stable annuities

and projected COLAs, remains the
escalating cost of healthcare.

The political fight over health subsidies
that triggered the shutdown occurs amidst

reports of significant premium increases
in the general health insurance market.

This environment indicates that even
with a guaranteed annuity, retirees

face massive cost pressures on their
largest fixed expense—healthcare

premiums—magnifying the importance
of maintaining the integrity and

affordability of the FEHB program.

Issues That Affect Current Federal Workers

For the active federal workforce,
the seven days from September 28 to

October 4 brought an unparalleled
combination of furloughs, administrative

chaos, and the explicit threat
of mass, permanent job loss.

Furlough Execution and
Workforce Prioritization

The government shutdown officially
commenced on Wednesday, October

1, 2025, requiring agencies to
implement their contingency plans.

The Trump administration’s plan
dictated the furlough of approximately

550,000 federal employees.

Critically, this figure represents only
about 23% of the total federal workforce,

a remarkably low percentage compared
to previous lapses in appropriations.

The Office of Personnel Management
(OPM) guidance outlines three distinct

categories for employees during the lapse

:   Furloughed Employees: These are
"non-essential" personnel who are placed

on temporary, non-duty, non-pay status.

Excepted Employees: These personnel
are deemed essential and must

continue working, as their duties are
necessary under the legally permitted

exceptions to the Antideficiency Act.

They are required to work but
may not be paid until Congress

acts to authorize retroactive pay
following the end of the lapse.

Exempt Employees: These employees are
unaffected by the shutdown because their

agency functions utilize funding from a
source other than annual appropriations,

such as carryover or supplemental funding.

They continue to be paid normally.

The low 23% furlough rate
is highly significant.

If less than one-quarter of the workforce
is placed on temporary, unpaid leave,

it suggests that a much larger segment
of the remaining 77% must be categorized

as either "excepted" (working without
pay) or "exempt" (continuing to work).

This places an extraordinary burden on
the active workforce already struggling

with months of turmoil and heightens
political pressure on the definition

of legally necessary "excepted" duties.

Regarding payroll, federal civilian
employees received their paychecks

for the September 7 through September
20 pay period on schedule, as

processing for that period was
completed before the October 1 lapse.

However, pay covering the period
of the shutdown itself is delayed

until congressional action authorizes
funds and provides retroactive pay.

Mass Firings and the
Reduction-in-Force (RIF) Strategy

The shutdown was immediately framed by the
administration not as a temporary funding

dispute, but as an opportunity to push
through permanent personnel reductions.

President Trump stated on Tuesday,
September 30, that a shutdown could

include “cutting vast numbers of people
out,” moving the focus from temporary

furlough to permanent termination.

Reports confirmed that the White House
was instructing agencies to prepare

reduction-in-force (RIF) plans for
mass firings during the possible lapse.

OPM issued specific guidance clarifying
the relationship between the RIF

process and the lapse in appropriations.

A RIF is officially considered
separate from the shutdown furlough

process, but the administration
determined that the work necessary to

administer the RIF process, including
required Human Resources and payroll

functions, is an excepted activity.

This critical administrative
determination means that even as

non-essential government services cease,
the machinery for permanent staffing

cuts—the RIF process—is authorized to
continue operating during the shutdown,

with designated personnel working
without guaranteed immediate pay.

Agencies conducting RIFs must still issue
the required 60-day notice to employees.

If a RIF notice is issued, the
employee retains employment status

during that notice period, even if
they are simultaneously placed on

furlough status during the lapse.

Should the shutdown end during the
RIF notice period, the employee

would be entitled to retroactive pay.

Administrative Leave and Pay Directives

The convergence of the DRP mass
resignation deadline and the shutdown

required immediate administrative
action regarding leave status.

For those employees who were scheduled
to be on administrative leave related

to DRP, RIF, or similar realignment
purposes on or after October 1, the

employing agency was mandated to
cancel that administrative leave.

Those personnel were immediately
converted to standard furlough status

due to the lapse in appropriations.

This abrupt administrative shift
confirms the immediate and overriding

power of the appropriations lapse.

While employees with a formal
resignation date of September 30 were

successfully off-boarded, those whose
administrative leave was scheduled

to continue past that date were
moved to unpaid, non-work furlough.

This action nullifies pre-existing
personnel agreements (administrative

leave) and transfers the financial
burden of the shutdown onto

personnel who were technically
awaiting separation or retirement.

Finally, in a directive relevant to agency
leadership, the OPM issued a memorandum

on Thursday, October 2, 2025, confirming
the continuation of the pay freeze for

certain Senior Political Officials.

OPM guidance advised agencies to
maintain the frozen pay rate until

Congress passes new appropriations
legislation that explicitly

addresses the status of the freeze.

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.