The FED Weekly

Lawrence: Welcome to The FED Weekly for
30 November to 6 December 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 Final Hours of Open Season

If you have not yet finalized your
health insurance elections for 2026,

you are officially out of time to delay.

The Federal Benefits Open Season concludes
tomorrow, Monday, 8 December 2025.

This deadline applies to the Federal
Employees Health Benefits (FEHB)

program, the newly established Postal
Service Health Benefits (PSHB) program,

and the Federal Employees Dental and
Vision Insurance Program (FEDVIP).

It is critical to understand
that this year carries more

risk for inaction than usual.

Several plans have exited the program
or reduced their service areas.

For instance, the GEHA Indemnity
Benefit Plan Elevate Plus is not

available for the 2026 plan year.

If you are currently enrolled in a
terminating plan and do not make a new

selection by tomorrow night, the Office
of Personnel Management (OPM) will

automatically map you to a default plan.

For standard civil service
employees, this default is the

GEHA Benefit Plan High Option.

For Postal Service employees
transitioning to the PSHB, the default

is the Blue Cross and Blue Shield
Service Benefit Plan FEP Blue Focus.

While automatic mapping ensures
you are not left uninsured, the

default plan may not match your
specific medical needs or budget.

Furthermore, for active employees
who utilize Flexible Spending

Accounts (FSAFEDS), you must
actively re-enroll by 8 December.

These accounts do not renew automatically.

The IRS has raised the pre-tax
contribution limit for health care

FSAs to $3,400 for 2026, a $100
increase from the previous year,

with a carryover maximum of $680.

Given the rising cost of medical
care, failing to re-enroll effectively

leaves tax savings on the table.

The 2026 Pay Raise:
Awaiting the Executive Order

Turning to compensation, the federal
community remains in a state of

suspended animation regarding
the January 2026 pay adjustment.

As of this week, we are still awaiting
the President’s formal Executive

Order to finalize the pay tables.

On 28 August 2025, the President issued
an alternative pay plan proposing a 1.0

percent across-the-board base pay increase
for the General Schedule, with zero

increase allocated for locality pay.

This proposal stands in
stark contrast to the 3.8

percent raise slated
for military personnel.

While there was significant
advocacy from federal unions and

some members of Congress to achieve
parity between civilian and military

raises, no legislation has advanced
to override the President’s plan.

However, there is a
notable exception emerging.

The administration has directed
OPM to utilize special pay

authorities to provide an additional
increase of approximately 2.8

percent for specific law
enforcement officers.

This targeted adjustment is intended
to bring their total raise to 3.8

percent, matching the military figure.

OPM is currently in consultation with
agencies to determine exactly which

law enforcement categories will qualify
for this special rate, with the goal

of releasing the special rate tables
by the end of the calendar year.

For the vast majority of the
workforce—including retirees who look

to pay tables to project future high-3
calculations for their successors—the 1.0

percent figure appears
increasingly likely to stand.

Unless Congress inserts language
into a spending bill before

the end of December, the 1.0

percent raise will be finalized by
Executive Order and effective the

first full pay period of January 2026.

Thrift Savings Plan Updates

In financial news, the Thrift
Savings Plan (TSP) is reflecting

the broader economic uncertainty.

As of December 2025, the interest
rate for the G Fund—the government

securities fund utilized by
risk-averse investors and retirees

seeking stability—has risen to 4.125

percent.

This rate is calculated based on
the weighted average yield of U.S.

Treasury securities and
has ticked up from 4.00

percent in previous months as the Federal
Reserve maintains higher interest rates.

For those with exposure to the
equity markets, the year has

been volatile but profitable.

The I Fund, which tracks
international stocks, has posted a

year-to-date return of nearly 29.5

percent as of early December,
while the C Fund is up 18.2

percent.

However, participants should be
aware of year-end processing dates.

Withdrawals processed after noon
Eastern Time on 29 December 2025

will be reported to the IRS as income
for the 2026 tax year, not 2025.

Planning your distributions
carefully in these final weeks

is essential for tax management.

Economic Data Delays

Finally, a note on the data
environment we are operating in.

The Bureau of Labor Statistics (BLS)
announced on 5 December 2025 that the

release of the monthly jobs report
has been delayed until 16 December.

This delay is a direct ripple effect
of the recent government shutdown,

which restricted BLS operations.

This lack of timely data complicates
the ability of policymakers and unions

to argue for economic adjustments,
as the "gold standard" labor market

data for October will simply never
be published in its entirety.

This is a subtle but significant
degradation of the administrative

infrastructure that underpins
federal pay and policy decisions.

Issues That Affect Retired Federal Workers

2026 COLA and Benefit Adjustments

Looking forward to the new year,
the Cost-of-Living Adjustment

(COLA) for 2026 has been finalized.

Social Security benefits and
Supplemental Security Income (SSI)

payments will increase by 2.8

percent in 2026.

This same 2.8

percent adjustment applies
to Civil Service Retirement

System (CSRS) annuities.

For SSI recipients, the increased
payments will begin on 31 December 2025.

For Social Security and CSRS retirees,
the increase will appear in the

payment received in January 2026.

While this increase is intended to offset
inflation, retirees must carefully balance

this against rising health care costs.

With FEHB premiums increasing
for the 2026 plan year, a

significant portion of this 2.8

percent COLA may be absorbed
by higher insurance deductions.

It is imperative that you review your
annuity statement in January to understand

your net change in purchasing power.

Additionally, earning limits for
retirees under full retirement

age will increase in 2026.

The earnings limit will rise to $24,480.

For every $2 earned above this
limit, $1 is withheld from benefits.

If you are a FERS retiree receiving
the Special Retirement Supplement, or

a Social Security beneficiary who has
returned to work, ensure your 2026

income projections remain under this
threshold to avoid unexpected penalties.

Issues That Affect Current Federal Workers

The first week of December has been
defined by a dramatic legal confrontation

between federal unions and the State
Department, as well as new regulatory

threats to civil service protections.

The State Department RIF Lawsuit

The most significant story of the
week is the collision between agency

layoffs and the Continuing Resolution.

The spending bill passed in November
contains a specific provision—Section

120—that prohibits agencies from using
federal funds to "initiate, carry out,

implement, or otherwise notice a reduction
in force" (RIF) through 30 January 2026.

Despite this statutory prohibition,
the State Department attempted to

proceed with the termination of
approximately 250 Foreign Service

Officers on Friday, 5 December 2025.

The Department argued that because
these RIF notices were originally

issued in July—months before
the shutdown and the subsequent

CR—the prohibition did not apply.

They claimed they were merely
finalizing a process already in motion.

The American Federation of Government
Employees (AFGE) and the American

Foreign Service Association (AFSA)
filed an emergency lawsuit, AFGE v.

Biden, seeking a Temporary Restraining
Order (TRO) to halt the firings.

On the evening of Thursday,
4 December 2025, U.S.

District Judge Susan Illston
ruled in favor of the unions.

Judge Illston’s ruling was precise.

She focused on the word
"implement" in the statute.

She determined that by separating
employees on 5 December, the State

Department would be taking an affirmative
step to "implement" a RIF, which

Congress had explicitly forbidden.

She issued a TRO blocking the
layoffs, stating that the unions

were likely to succeed on the merits
and that the employees would suffer

irreparable harm if terminated.

This ruling has immediate implications
beyond the State Department.

There are roughly 800 other federal
employees at agencies such as the

Department of Education’s Office for
Civil Rights, the Defense Technical

Information Center, and the Small
Business Administration who are

facing similar "carry-over" RIFs.

The unions are now seeking to
expand the scope of the TRO to

protect these workers as well.

For now, the 250 State Department
employees remain on the payroll, but

the legal battle will continue as
the administration is expected to

challenge the interpretation of the CR.

Schedule F Regulations Re-Emerge

While the courts battle over current
layoffs, a longer-term threat to the civil

service structure re-emerged this week.

On 5 December 2025, Government Executive
reported that the Office of Personnel

Management (OPM) has circulated draft
final regulations for "Schedule F"

(now renamed Schedule Policy/Career).

These regulations would create
a new job classification for

"policy-related" positions,
effectively stripping those employees

of their civil service protections
and making them at-will employees.

The draft regulations reportedly
describe the existing civil service

protections as "unconstitutional
overcorrections" to the patronage

system and assert that the President
requires the ability to implement

an agenda "free from antidemocratic,
unaccountable bureaucratic resistance".

OPM estimates that approximately
50,000 federal workers could be

reclassified under this new schedule.

This represents about 2 percent
of the civilian workforce, but the

impact would be concentrated in
policy-making and regulatory roles.

The publication of these final
rules appears imminent, setting

the stage for a profound structural
change to the federal service unless

blocked by Congress or the courts.

NDAA 2026: The Fight for Union Rights

On Capitol Hill, the legislative
process for the Fiscal Year 2026

National Defense Authorization
Act (NDAA) is reaching its climax.

On 4 December 2025, the National
Federation of Federal Employees

(NFFE) sent a letter to congressional
leadership urging the retention of a

critical amendment in the final bill.

The House version of the NDAA includes a
provision that would restore collective

bargaining rights for Department of
Defense (DoD) civilian employees.

These rights were previously
curtailed by an Executive Order

citing national security concerns.

The NFFE letter, supported by the Federal
Workers Alliance, argues that the removal

of these rights was counterproductive
and costly, and that unionized civilians

have supported the DoD mission for
decades without compromising security.

Because this provision exists in the
House bill but not the Senate version,

it is vulnerable to being stripped
out during the conference committee

negotiations currently underway.

The final conference report is expected
soon, and its content will determine

whether hundreds of thousands of DoD
civilians regain their union protections.

Wage Grade Pay Raises

Finally, there is positive news
for the blue-collar workforce.

On 1 December 2025, it was confirmed
that retroactive pay raises are

finally being processed for more than
118,000 DoD Wage Grade (WG) employees.

These employees, paid under the
Federal Wage System, had seen their

2024 pay adjustments delayed due to
administrative gridlock and the shutdown.

The DoD Wage Committee has now
authorized the updates, and the raises

are being applied retroactively to
their original effective dates in 2024.

While the payout timeline will vary by
payroll provider, the confirmation that

the freeze has thawed is a significant
relief for the trade and craft

workers essential to base operations.

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.