The FED Weekly 12-18 Oct 2025 (Episode 20)

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Lawrence: Welcome to The FED Weekly
for 12-18 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 Deepening Financial Crisis
and Back Pay Uncertainty

The lapse in annual appropriations,
which began on October 1, 2025, pushed

the federal workforce past a critical
financial threshold during this period.

For hundreds of thousands of civilian
federal employees, the failure of Congress

and the President to resolve the funding
impasse resulted in the first full missed

paychecks around October 15, covering
the pay period that ended on October 18.

This financial shock affects two
distinct groups: the estimated 700,000

or more employees who have been
officially furloughed, and the nearly

equal number of "excepted" personnel,
who are required to work without

compensation during the shutdown.

The stress on federal families has
intensified, with union leaders

claiming workers are being "held
hostage by a political dispute".

This period also saw
significant uncertainty

surrounding guaranteed back pay.

Although receiving back pay after
a shutdown has been a long-standing

practice, President Donald Trump
suggested on Tuesday of this week

that furloughed employees would not
necessarily receive this benefit.

The administration later issued
guidance suggesting that only

excepted employees working without
pay were guaranteed back pay.

This threat, widely seen as a
strong-arm negotiating tactic, created

substantial unease and panic throughout
the workforce, as employees already

facing the loss of an entire paycheck
confronted the possibility that their

lost income might never be recovered.

An acute disparity arose regarding
pay for military personnel.

Active-duty service members
were facing the prospect of

missing a paycheck on October 15.

To mitigate this potential political
pressure point, President Trump

directed the Pentagon to repurpose
approximately $8 billion in military

research and development funds to
ensure active-duty troops received

payment for up to two pay periods.

This executive maneuver temporarily
removed one major element of financial

pressure from the budget negotiations,
although it simultaneously drew

criticism and legal scrutiny concerning
the Executive Branch's authority to

unilaterally divert congressionally
appropriated funds from one

purpose (R&D) to another (payroll).

The decision to secure military pay while
civilian workers faced threats to their

back pay amplified the perception that
the financial distress of the civilian

workforce was being deliberately utilized
as leverage to push political demands.

Shocking Increase in 2026 Health
Benefits Premiums and Open Season

A major announcement from the Office
of Personnel Management (OPM) this

week delivered a severe financial blow
to both current and retired federal

employees: the details of the 2026 Federal
Employees Health Benefits (FEHB) program.

OPM announced on October 9, 2025,
that the average enrollee share

of premiums under the FEHB program
will increase sharply by 12.3%

for the 2026 plan year.

This increase marks the second consecutive
year of double-digit premium hikes, a

trend that federal employee advocacy
groups, such as the National Active and

Retired Federal Employees Association
(NARFE), have decried as unsustainable.

This announcement is particularly
impactful because it occurred

while current employees are facing
financial ruin due to the shutdown.

Employees currently navigating the
stress of missed paychecks must soon

begin comparing coverage options during
the 2025 Federal Benefits Open Season,

scheduled to run from November 10
through December 8, 2025, knowing they

must budget for significantly higher
healthcare costs in the coming year.

Furthermore, the new plan year brings
instability in carrier options.

For 2026, six plans, offering a total
of eight options, will be dropping

out of the FEHB program, including the
NALC Health Benefit Plan Standard and

High options, and various options from
carriers such as Health Alliance HMO,

AvMed Health Plan, Independent Health,
and Blue Care Network of Michigan.

This forces thousands of employees
and annuitants to select a new plan

during Open Season, compounding
the financial stress with

complex administrative choices.

Thrift Savings Plan Stability
and Financial Relief Legislation

Amidst the economic turmoil, the
Thrift Savings Plan (TSP) provided

crucial stability and operational
reassurance to its participants.

The TSP confirmed that, despite the
ongoing lapse in appropriations, it

continues its normal daily operations.

For active participants who have
outstanding TSP loans and have been

placed in a non-pay status due to
the shutdown, the TSP proactively

stated it will automatically
update the employee's status.

This ensures that the participant’s loan
remains in good standing, thus preventing

a default that could incur substantial tax
penalties, even if scheduled repayments

are missed during the funding lapse.

In Congress, several bills were
introduced or advanced to protect

federal workers from the financial
collateral damage of the shutdown.

Congressman Suhas Subramanyam, along
with co-sponsors, introduced the Shutdown

Guidance for Financial Institutions Act.

This bill aims to shield furloughed
and excepted employees from losing

access to credit and suffering negative
consequences on their credit scores

due to temporary payment difficulties.

It mandates federal financial regulators,
such as the Federal Reserve and the

Consumer Financial Protection Bureau, to
issue guidance encouraging institutions

to offer relief, such as loan modification
or new credit extensions, and requiring

them to prevent adverse credit
reporting related to shutdown hardship.

A related measure co-sponsored by
Congressman Subramanyam is the Emergency

Relief for Federal Workers Act, which
would allow federal workers to make

penalty-free withdrawals from their
retirement accounts during a shutdown.

These legislative proposals collectively
underscore the critical need for systemic

protections when the government’s failure
to fund itself places the financial

security of its workers at risk.

Issues That Affect Retired Federal Workers

Delayed COLA Announcement
and the FERS Penalty

The government shutdown caused a direct
logistical delay in the calculation and

announcement of the 2026 Cost-of-Living
Adjustment (COLA), affecting all federal

annuitants and Social Security recipients.

The annual COLA calculation relies on
the release of the September Consumer

Price Index for Urban Wage Earners
and Clerical Workers (CPI-W) data by

the Bureau of Labor Statistics (BLS).

The CPI release, originally scheduled for
Wednesday, October 15, 2025, was postponed

due to the funding lapse, effectively
delaying the final COLA announcement.

The Social Security Administration
(SSA) confirmed on October 14, 2025,

that the COLA announcement would be
delayed until the BLS releases the

September CPI figures, now rescheduled
for Friday, October 24, 2025.

While officially delayed, projections
based on inflation data through

August 2025 anticipate the 2026
COLA will be approximately 2.7%.

This delay forces retirees to
budget for 2026 based on two highly

uncertain figures: an official COLA
rate that has not yet been confirmed,

and a confirmed, staggering 12.3%

average increase in their FEHB premiums.

The postponement of the COLA, while only
nine days, creates immediate financial

planning difficulties for those on fixed
incomes who require the precise rate to

assess their purchasing power against
rising costs, especially healthcare.

The period also provided a reminder
of the permanent legislative

disadvantage faced by Federal Employees
Retirement System (FERS) annuitants.

The current law dictates that when the
inflation rate (CPI-W) falls between 2.01%

and 3.0%,

FERS retirees receive a
capped increase of only 2.0%,

which is lower than the full
increase received by Civil Service

Retirement System (CSRS) retirees
and Social Security beneficiaries.

For the 2025 COLA, FERS
retirees received 2.0%,

compared to the 2.5%

applied to CSRS and Social Security.

This structural difference leads to
a continuous, compounding erosion of

FERS retirement benefits over time,
motivating support for legislation

such as the Equal COLA Act (H.R.

866 and S.

3194) aimed at eliminating this penalty.

The OPM Retirement Processing Crisis

The retirement system for federal
employees is currently facing

an unprecedented crisis of
capacity, amplified significantly

by the ongoing shutdown.

This crisis stems from the historic
mass exodus of the federal workforce,

driven by a combination of standard
retirements, buyouts, and the

Deferred Resignation Program (DRP).

Leading up to the end of Fiscal Year
2025 (September 30), the federal

government experienced a massive wave
of departures, including approximately

154,000 employees who accepted buyout
offers and were removed from the payroll,

alongside an 18% surge in regular
retirements compared to the previous

year, totaling nearly 105,000 annuitants.

Many of the 60,000 workers who
retired via the DRP are among those

currently awaiting their benefits.

This volume has overwhelmed the Office
of Personnel Management (OPM), which

handles final annuity processing.

As of mid-October 2025, OPM is grappling
with a backlog of over 35,000 unprocessed

retirement claims, resulting in average
processing times stretching to 76 days.

The fundamental problem is that
the wave of mass departures was not

matched by administrative capacity.

The government's push for rapid
workforce reduction effectively

dismantled the administrative
infrastructure—both at OPM and in

agency Human Resources offices—necessary
to administer the benefits owed

to those departing employees.

The operational complexities of the
shutdown have worsened this problem.

OPM workers responsible
for handling paperwork and

payroll have been furloughed.

Furthermore, final retirement
applications cannot be processed

until the separating agency issues
the employee’s final paycheck, a step

that is itself disrupted by the agency
furloughs imposed by the shutdown.

This bureaucratic logjam leaves thousands
of recent retirees in financial limbo,

receiving only interim annuity payments
or waiting for the FERS Annuity Supplement

to begin after case finalization.

OPM Director Scott Kupor acknowledged
the crisis, characterizing the legacy

paper-based retirement process, centered
at the Retirement Operations Center

in Boyers, Pennsylvania, as archaic.

Kupor stated he remains optimistic and is
pursuing modernization efforts, including

mandating the use of the new Online
Retirement Application (ORA) system, which

provides OPM early visibility into the
projected 60,000 claims in the pipeline.

Additionally, OPM is coordinating with
other agencies to detail HR staff to OPM

to assist with the overwhelming workload.

Legislation to Enhance
Retirement Creditable Service

For employees approaching retirement,
the Federal Retirement Fairness Act (H.R.

1522) remains a vital piece
of pending legislation.

This bill proposes to
amend Title 5 of the U.S.

Code to allow civilian service
performed in a temporary position after

December 31, 1988, to be counted as
creditable service under the Federal

Employees Retirement System (FERS).

If enacted, this measure would allow
thousands of employees to buy back

time previously deemed non-creditable,
potentially increasing their

retirement annuity calculation and
accelerating their eligibility date.

Issues That Affect Current Federal Workers

Implementation of Targeted
Mass Layoffs (RIFs)

The defining event for current federal
workers during this week was the beginning

of mass, permanent layoffs across the
civil service, implemented under the

guise of the ongoing funding lapse.

The administration had utilized the lack
of appropriations to execute planned

workforce elimination, targeting programs
inconsistent with the President’s agenda.

On Friday, October 10, 2025 (just
preceding the start of this reporting

period), White House Office of Management
and Budget (OMB) Director Russell

Vought announced that Reductions in
Force (RIFs) were officially underway.

These layoffs are highly strategic,
directed specifically at programs and

activities that satisfy three conditions:
discretionary funding lapses on October

1, 2025; no other funding source is
available; and the program is inconsistent

with the President’s priorities.

OMB Director Vought was quoted as saying
that the targeted programs "are never

going to come back, in many cases".

Reports by October 14, 2025,
confirmed that RIF notices had

been issued to approximately 4,200
federal employees across seven

agencies in the initial phase.

The agencies facing the deepest immediate
cuts included the Treasury Department,

which issued RIF notices to 1,446
employees, and the Department of Health

and Human Services (HHS), which targeted
between 1,100 and 1,200 employees.

Other agencies included the Department
of Education (466 employees), Department

of Housing and Urban Development (442
employees), Commerce Department (315

employees), Energy Department (187
employees), and the Department of

Homeland Security (176 employees).

However, in a confusing development,
700 firings issued to staff at the

Centers for Disease Control and
Prevention (CDC) were abruptly reversed

over the weekend of October 12–13.

Procedural Chaos and
Administrative Cruelty

The process of issuing these RIF
notices during the shutdown created

widespread administrative chaos
and intensified employee distress.

Employees who had been furloughed—which
applies to most personnel in departments

like Education—were unable to access
their official government email accounts.

Since RIF notices were sent to these
inaccessible official emails, employees

at the Department of Education reported
being "in a panic" because they had no

way to confirm if they had been fired.

They were forced to seek permission
to check their accounts or rely

on communication from "excepted"
co-workers who retained access.

This communication failure during
a high-stakes personnel action

exacerbated the already severe anxiety
gripping the workforce, which had

endured months of reductions and
threats leading up to the shutdown.

The timing of the firings was also
heavily criticized, with one employee

noting the RIFs in the special education
program office were conducted the

day before the funeral of a longtime
division director, underscoring the

perceived lack of consideration for
the human impact of the downsizing.

Executive Order 14356: Restructuring
Federal Hiring and Accountability

In a move cementing the administration’s
structural control over the workforce,

President Trump signed Executive Order
14356, "Ensuring Continued Accountability

in Federal Hiring," on October 15, 2025.

This order fundamentally restructures
how the government hires career

employees, extending political
oversight over personnel decisions far

beyond the immediate shutdown crisis.

The order imposes a strict constraint,
stipulating that no vacant civilian

position may be filled, and no new
position may be created, except as

explicitly provided for in the order.

This mandate effectively institutionalizes
an indefinite hiring freeze,

requiring every agency to justify the
necessity of filling any position.

The primary mechanism for this control
is the mandated establishment of

a Strategic Hiring Committee (SHC)
within 30 days of the order’s issuance.

These committees are composed of
senior agency leadership, including

the deputy agency head and the
chief of staff—positions typically

held by political appointees.

The SHC is tasked with approving
the creation or filling of

each vacancy within the agency.

Crucially, the SHC must ensure that
agency hiring is consistent with "the

national interest, agency needs, and
the priorities of my Administration".

Agencies are also required to create
Annual Staffing Plans, which will be

monitored quarterly by OPM and OMB.

The incorporation of "Administration
priorities" as a mandatory criterion

for approving career civil service
vacancies moves the hiring process

away from traditionally non-partisan,
merit-based selection and centralizes

political control over the
composition of the career workforce.

This directive is seen by critics as
a long-term mechanism to ensure that

the federal bureaucracy is staffed by
individuals aligned with the incumbent

political agenda, regardless of the
agency's specific mission requirements.

Pending Congressional
Relief for Active Employees

To directly counter the threats facing
current federal workers, specific

legislation remains pending in Congress.

The Securing Assurance for Federal
Employees (SAFE) Act was introduced to

explicitly prohibit the administration
from conducting Reductions in Force

(RIFs) during a government shutdown.

Its passage would prevent
the weaponization of funding

lapses as a mechanism for
permanent workforce reductions.

Additionally, in response to
the operational burden imposed

by the shutdown, Representative
Ilhan Omar introduced H.R.

5720, which aims to provide
reimbursement to federal employees

for childcare expenses incurred
due to the lapse in appropriations

that began on October 1, 2025.

This acknowledgment of the ancillary
costs and logistical challenges imposed

on working federal parents during a
shutdown highlights the comprehensive

disruption caused by the funding crisis.

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.

The FED Weekly 12-18 Oct 2025 (Episode 20)
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