Understanding Congress’s 2025 Proposals
Congress has passed a budget resolution directing the House Oversight and Government Reform Committee to cut $50 billion in mandatory spending. Then, on April 30, 2025, the committee advanced a legislative package targeting federal employee benefits as part of the 2025 budget reconciliation process. Under “reconcilitation,” changes could be implemented with just 51 Senate votes instead of the usual 60.
Federal employee unions (including NTEU and NAGE) and the National Active and Retired Federal Employees Association (NARFE) strongly oppose these cuts. They argue the changes would not only break promises to current employees but also reduce the appeal of federal service. This would exacerbate workforce challenges amid planned reductions in force (RIFs).
While these proposals aren’t yet law, they represent a serious threat to your benefits. Your engagement with congressional representatives could help shape the final outcome. We encourage you to stay informed and contact your congressional representatives if you oppose these cuts.
Below is a summary of the key proposals based on available information, as of May 7, 2025.
1. Increasing FERS Contribution Rates
Proposal: Standardize FERS employee contributions at 4.4% of salary for all employees, regardless of hire date. Currently, contribution rates vary: 0.8% for employees hired before 2013, 3.1% for those hired in 2013, and 4.4% for those hired in 2014 or later.
These increases would start in 2026 in two stages: a 1.8 percentage point boost in calendar year 2026, to 2.6, and a further 1.8 percentage point increase starting in calendar year 2027, to 4.4. For those currently paying 3.1 percent, there would be a 1.3 percentage point boost in 2027.
Impact: This effectively reduces take-home pay, especially for pre-2013 hires, as it increases contributions without additional benefits. It’s projected to save $44 billion over 10 years but at a significant cost for affected federal employees.
2. Eliminating the FERS Special Retirement Supplement (SRS)
Proposal: Eliminate the FERS supplement, which provides income for employees who retire before age 62 (when Social Security eligibility begins). The elimination of the FERS supplement would apply to anyone who becomes eligible for that benefit after “the date of enactment of this act” except for those subject to mandatory retirement—primarily meaning law enforcement officers, firefighters, and air traffic controllers.
Impact: Loss of this supplement could create an income gap for early retirees who were counting on this benefit. The proposed timeline for implementation would affect some employees who are applying for the deferred resignation program (DRP) and haven’t yet left federal service. It could also impact those opting into the Voluntary Early Retirement Authority (VERA), if their retirement date occurs after the legislation is enacted.
3. Changing Annuity Calculations (High-3 to High-5)
Proposal: Base annuity calculations on the average of the highest five years of salary instead of the current highest three years. The proposed switch to a “high-5” calculation would impact both the Federal Employees Retirement System (FERS) and the Civil Service Retirement System, and would affect anyone who retires on or after January 1, 2027.
Impact: This would reduce annuity payments, as it includes lower-earning years in the calculation. The reduction could be significant in some cases, especially when you factor in a long retirement.
4. At-Will Employment Trade-Off
Proposal: Forcing new hires to choose “at-will” employment with a lower FERS contribution rate (4.4%) or retain civil service protections with a higher rate (9.4%).
Impact: This could undermine job security for those opting for lower contributions and increase costs for those retaining protections. In an “at-will” employment status, employees could be fired without cause, notice, or the right to appeal the termination, according to the bill’s current language. However, the protections afforded to employees in the case of prohibited personnel practices would still apply.
5. FEHB Audit:
Proposal: Mandating an audit of the Federal Employees Health Benefits (FEHB) program dependents to remove ineligible participants.
Impact: Employees must provide marriage and birth certificates to prove eligibility for family members.
6. Charge a MSPB Filing Fee
Proposal: Charge current federal employees, former federal employees, and federal job applicants a $350 fee to file a claim or appeal with the Merit Systems Protection Board.
Impact: Currently, employees can file with the MSPB and have their cases adjudicated, free of charge, as one of the board’s primary statutory functions “to protect federal merit systems against partisan political and other prohibited personnel practices.”
Impact on Federal Employees & Workforce Competitiveness
These proposals aim to align federal benefits with private-sector standards, where defined benefit pensions and retiree health insurance are less common. However, federal employees already earn an estimated 25% less than private-sector counterparts for similar roles, and benefits are a key recruitment and retention tool.
Increasing contributions without enhancing benefits effectively acts as a pay cut while reducing annuities or health coverage could deter talent, especially amid workforce downsizing. The focus on short-term savings may also overlook long-term costs, such as higher turnover or reduced government efficiency.
What You Can Do
Remember: These are still just proposals, not law. Your actions now can help shape the final outcome:
Contact Your Representatives
- Call or write to your congressional representatives
- Share specific examples of how these changes would affect you
- Join letter-writing campaigns organized by employee groups
- The NTEU Legislative Action Center provides a quick and easy way to send an email to your representatives in the House and in the Senate
Get Involved with Employee Organizations
- Join or increase participation in federal employee unions, including NAGE and NTEU
- Support NARFE’s advocacy efforts
- Follow updates from your agency’s employee organizations
Stay Informed
- Monitor congressional budget discussions
- Subscribe to federal employee news services
- Follow your union’s updates on legislative actions
Plan Ahead
- Review your retirement planning assumptions
- Consider adjusting your TSP contributions
- Document your career timeline and how these changes might affect it
The more federal employees who speak up, the better chance of influencing these proposals. Your voice matters.
If you need assistance understanding your current federal benefits or want information about joining a federal employee union, please fill out the form below. We are here to help you navigate these potential changes.