The FED Weekly

Lawrence: Welcome to the Federal
Workforce Roundup 8-14 June 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 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.

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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.