The FED Weekly

Lawrence: Welcome to The FED Weekly
for 21-27 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 most immediate story
dominating the week of 21 to 27

December 2025 was, of course, the
unprecedented holiday schedule.

President Donald Trump issued an
Executive Order on 18 December 2025,

which closed executive departments
and agencies on Wednesday, 24 December

2025, and Friday, 26 December 2025.

While the order was signed just prior to
this reporting period, the operational

impact was felt squarely during this week.

This directive effectively created a
five-day weekend for the majority of

the federal workforce, spanning from
Wednesday through the following Sunday.

Moving beyond the holidays, the
finalized pay and benefit structures

for 2026 were a major focus this week.

The President’s alternative
pay plan has cemented a 1.0

percent across-the-board pay increase for
the General Schedule and other statutory

pay systems, effective in January 2026.

Crucially, this plan freezes locality
pay percentages at 2025 levels.

This 1.0

percent increase applies to the
base pay of current employees.

However, there is a notable exception
that emerged in the details this

week regarding law enforcement.

Recognizing the acute retention
challenges in that sector, the

administration directed the Office
of Personnel Management to utilize

special rate authorities to
provide an additional increase to

federal law enforcement officers.

These officers will
receive the standard 1.0

percent increase plus an approximate 2.8

percent special rate adjustment, bringing
their total 2026 raise to roughly 3.8

percent.

This move creates parity with the 3.8

percent pay raise secured by the military,
acknowledging the distinct pressures on

the federal police and security workforce.

On the benefits front, this week marked
the final transition period before the

launch of the Postal Service Health
Benefits program on 1 January 2026.

For millions of postal employees
and postal retirees, the Federal

Benefits Open Season, which
concluded earlier in December, was

the last chance to select a plan.

During the week of 21 December, the
Office of Personnel Management and the

Postal Service were in the final stages
of processing "automatic enrollments"

for those who did not make a selection.

If you are a postal employee or
retiree who did not actively choose a

new plan, you are being automatically
mapped to a corresponding Postal

Service Health Benefits plan or the
lowest-cost nationwide option that

is not a High Deductible Health Plan.

This administrative migration is massive,
separating postal participants from

the wider Federal Employees Health
Benefits pool for the first time.

Simultaneously, we saw developments
regarding the federal budget.

While a full government shutdown was
averted with the passage of a Continuing

Resolution extending funding through
30 January 2026, legislative activity

regarding shutdown protections continued.

The "Shutdown Fairness Act," introduced as
Senate Bill 3012 by Senator Ron Johnson,

remains a key piece of legislation
for the entire federal community.

This bill seeks to permanently
appropriate funds for "excepted"

employees—those required to work
during a shutdown—ensuring they are

paid on time rather than waiting for
back pay after the government reopens.

Although the bill struggled to overcome
a filibuster earlier in the session

due to disagreements over coverage
for furloughed workers, it remains

on the Senate calendar as a potential
vehicle for future budget deals.

The uncertainty of the March deadline
hangs over both active agencies and

retirement processing centers, making
this bill a critical watch item.

Finally, in this section, we
must address the 2026 Federal

Employees Health Benefits premiums.

While announced earlier, the
reality of the double-digit premium

increases is hitting home as pay
periods adjust for the new year.

The average premium increase of 12.3

percent for 2026 represents a
significant absorption of the 1.0

percent pay raise for employees and the
Cost-of-Living Adjustment for retirees.

This trend of rising healthcare costs
outpacing income adjustments was a central

theme of discussion among federal employee
groups throughout the holiday week.

Issues That Affect Retired Federal Workers

For our retired listeners, the
week of 21 to 27 December 2025 was

the final countdown to the 2026
Cost-of-Living Adjustment, or COLA.

The numbers are locked in, and the
payment you receive on 2 January

2026 will reflect these changes.

Retirees under the Civil Service
Retirement System, or CSRS, will see a 2.8

percent increase in their gross annuity.

This figure is based on the rise
in the Consumer Price Index for

Urban Wage Earners and Clerical
Workers from the third quarter of

2024 to the third quarter of 2025.

This full inflation adjustment
is designed to maintain the

purchasing power of your pension.

However, for those retired under the
Federal Employees Retirement System,

or FERS, the adjustment is capped.

FERS retirees will receive a 2.0

percent increase.

This is due to the "diet COLA" provision
in federal law, which dictates that if

the inflation index rises between 2.0

and 3.0

percent, the FERS COLA is set flat at 2.0

percent.

This 0.8

percent gap between inflation and
your adjustment is a permanent

reduction in your purchasing power
relative to your CSRS counterparts.

It is also important to
remember the proration rule.

If you retired during the calendar year
2025, you will not receive the full COLA.

You will receive one-twelfth of the
increase for each month you were on the

annuity rolls before 1 December 2025.

For example, if you retired in June 2025,
you will receive half of the COLA amount.

While the COLA increases your
gross income, we must look at

the net impact, specifically
regarding Medicare Part B premiums.

The Centers for Medicare and Medicaid
Services established the standard

monthly premium for 2026 at $202.90,

an increase of $17.90

from the 2025 rate.

For many retirees, this increase
in Medicare premiums will consume a

significant portion of their COLA raise.

Furthermore, high-income retirees need
to be aware of the Income-Related Monthly

Adjustment Amounts, or IRMAA, for 2026.

Based on your modified adjusted gross
income from your 2024 tax return,

you may pay significantly more.

Single filers with income over $109,000
and joint filers over $218,000 will see

Part B premiums ranging from $284.10

to $689.90

per month per person.

Notices regarding these determinations
were mailed by Social Security throughout

late December, so if you received a letter
from Social Security this week, pay close

attention to the premium adjustments.

Legislatively, the disparity
in COLA remains a hot topic.

The "Equal COLA Act" continues to
be a priority for organizations

like the National Active and Retired
Federal Employees Association.

This bill aims to eliminate the
discrepancy between CSRS and

FERS adjustments, ensuring that
FERS retirees receive the full

measure of inflation protection.

While there was no floor vote on
this bill during the week of 21

December, the finalized 2026 rates
serve as a stark reminder of why

this legislation is being championed.

Another legislative item of note for
retirees is the "Federal Retirement

Fairness Act," House Bill 1522.

While primarily affecting those
transitioning to retirement, its

passage would allow for the "buyback"
of temporary service time post-1988.

This would allow many current retirees who
had temporary service that did not count

toward their annuity to potentially adjust
their service credit, though the current

version focuses on active employees
making deposits before retirement.

It remains a bill to watch
in the 119th Congress.

We also tracked the "Social Security
2100 Act" discussions, though

no movement occurred this week.

However, the taxation of your
benefits remains unchanged for 2026.

Your federal annuity remains fully
taxable at the federal level, and with

the expiration of certain Tax Cuts
and Jobs Act provisions looming at

the end of 2025, tax planning for the
2026 tax year should be a priority as

you receive your January statement.

Finally, for retirees managing
their accounts online, the Office

of Personnel Management's "Services
Online" portal is your primary tool

for viewing your 1099-R tax forms and
your Notice of Annuity Adjustment.

Despite the holiday closure,
these digital services remained

largely accessible, allowing you to
verify your new net payment amount

before the 2 January disbursement.

Issues That Affect Current Federal Workers

The most explosive development
involves the Transportation

Security Administration workforce.

Following an announcement earlier in
the month, the week of 21 December saw

continued fallout from the decision
to decertify the union representing

47,000 Transportation Security Officers.

A new "Labor Framework" is set to
take effect on 11 January 2026.

This framework rescinds the 2024
Collective Bargaining Agreement

between TSA and the American
Federation of Government Employees.

Under this new directive, union dues
will no longer be deducted from payroll

starting in January, and the formal
grievance and arbitration procedures

established under the contract will be
replaced by agency-defined protocols.

The Department of Homeland Security
argues this move is necessary for

national security agility and efficient
stewardship of taxpayer dollars.

In response, the House of Representatives
passed a bill on 11 December 2025 to

restore these bargaining rights, but
with the Senate schedule congested and

a veto threat from the White House,
the implementation of this non-union

framework appears imminent for January.

In a sharp contrast to the reduction
of traditional labor protections,

the administration launched a
massive new hiring initiative this

month: the United States Tech Force.

Officially announced in mid-December,
this program is actively recruiting

during the holiday period.

The Office of Personnel Management is
seeking to hire approximately 1,000

artificial intelligence and cybersecurity
experts for term appointments.

This "Tech Force" initiative
represents a departure from

traditional civil service hiring.

It explicitly prioritizes skills
and industry experience over formal

educational credentials and standard
competitive service procedures.

These recruits will be placed in agencies
like the Department of Defense, Treasury,

and Commerce to modernize legacy systems.

For current federal IT professionals,
this introduces a new layer of

"elite" term employees, often hired
at pay rates competitive with the

private sector, raising questions
about the long-term structure of

the federal technical workforce.

Telework also remains a battlefield.

During the week of 21 December,
discussions continued around the

"SHOW UP Act," or House Bill 139,
and the "Federal Employee Return

to Work Act," House Bill 236.

These Republican-sponsored bills
seek to mandate a return to 2019

pre-pandemic telework levels.

The legislation would require agencies
to justify any expansion of telework

to Congress and could potentially
link your locality pay to your actual

telework location rather than your agency
worksite—a change that could result

in significant pay cuts for employees
working remotely from lower-cost areas.

While these bills are pending, the
Office of Personnel Management issued

new guidance that was previewed this
week regarding "weather and safety

leave" in the context of telework.

The guidance, clarified in a memo
dated 29 December 2025, reinforces

that telework-eligible employees
are generally expected to work from

home when federal offices are closed
due to weather or other emergencies.

This effectively eliminates "snow days"
for the telework-ready workforce, a

policy nuance that becomes highly relevant
as we enter the winter storm season.

Regarding your paycheck,
we detailed the 1.0

percent general increase in Section
1, but there are other adjustments

to note for current workers.

The aggregate pay limitation for
2026 is set at $253,100, which is

Level I of the Executive Schedule.

For those in the Senior Executive
Service with certified performance

appraisal systems, the cap is $292,300.

Additionally, the pay freeze for senior
political appointees continues, meaning

their pay remains locked despite the
adjustments to the underlying schedules.

It is also vital to check your Leave and
Earnings Statement for the pay period

covering 21 December through 3 January.

With the 24 December and 26 December
holidays, ensure your time and

attendance was coded correctly.

If you worked, verify your holiday
premium pay; if you were off, ensure

you were not charged annual leave.

Finally, we are monitoring the "Federal
Adjustment to Income Rates Act,"

or FAIR Act, which had proposed a
significantly higher pay raise of 4.3

percent for 2026.

While the 1.0

percent raise is now final, advocacy
groups like the National Treasury

Employees Union have already
signaled they will push for a more

substantial adjustment in the 2027
budget cycle to close the widening

pay gap with the private sector.

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.