Federal Employees Update
June 30, 2025
The Senate Homeland Security and Governmental Affairs Committee’s proposals to raise federal employees’ required retirement contributions and charge unions for time spent engaging in organizing activities were among those removed. The new text comes after Senate Parliamentarian Elizabeth MacDonough determined several of the GOP’s civil service provisions violated the chamber’s reconciliation rules.
The Senate Committee on Homeland Security and Governmental Affairs: Contains a provision that would reestablish the authority for a president to reorganize government, provided the plan does not increase the size of federal agencies or federal spending. Unlike previous reorganization authorities, where Congress had a certain amount of time to either approve or disapprove of the plan, determining whether the president’s plan could be put in place, this provision does not carve out a role for Congress.
Although Senators are still hard at work debating all of the provisions in the BBB, indications right now are a key provision that would affect current federal employees is OUT (the Supplemental Annuity stays intact), however, new employees will pay substantially higher contributions to FERS, even if they elect 'at-will' employment.
This sets up a fight between the House and the Senate. As such, we're keeping the House provisions (below) up, but will continue to monitor and post changes.
Below are the FERS proposals contained in the House budget bill:
Increased FERS annuity contributions OUT for current employees hired before 2014 with a lower contribution percentage, IN for new employees (no date), depending on their at-will employment election
Supplemental Annuity takes effect on January 1, 2028, but anyone who is entitled* to the supplement prior to that is grandfathered in; employees who are part of an ‘early retirement’ (i.e., VERA) are also protected
The change from High-3 to High-5 for annuity calculations has been removed from the House version
FEHB changes have already been removed
*’Entitled’ is the language used in the U.S. Code describing the Retiree Annuity Supplement (RAS); it references an employee having met the service and age requirements to retire, thus being ‘entitled’ to the RAS
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