Fers Changes - 2025 House-Passed Reconciliation Bill keeps Two Major FERS Changes

Yes the 2025 House-passed reconciliation bill keeps two major FERS changes in place: eliminating the FERS annuity supplement for retirees after Jan 1, 2028, and forcing new hires to choose between civil-service protections or higher pension contributions.

‍

Relief provisions preserved high-3 pay averaging and current contribution rates. But the supplement cut and at-will clause remain. With Senate action pending, federal workers face uncertainty—and possible rollback of earned benefits.

‍

What the Bill Includes (and What It Dropped)

‍

A) Eliminate FERS Annuity Supplement (Bridge to Social Security)

‍

What it is: Monthly bridge payments until age 62 for early retirees.

Change: Phased out starting January 1, 2028. Anyone not already "entitled" by then loses eligibility—though law enforcement, air traffic controllers, and other mandatory retirees are exempt

Impact: A loss of roughly $1,500/month for early retirees—a serious financial gap .

B) High-3 vs High-5 Average Pay

Saved for now: Earlier House drafts proposed switching to a five-year average to calculate pensions. That has been fully removed from the current bill

C) FERS Contribution Rates

Dropped for present employees: Raising current employees’ contribution to 4.4% was removed, protecting many from a pay cut

D) At-Will Employment Choice for New Hires

Post-probation, new employees must decide between:

At-will status with 4.4% FERS contributions, or Full civil-service rights but a 9.4% contribution—a permanent, irrevocable choice

E) Miscellaneous Provisions

$350 fee for Merit Systems Protection Board appeals.

Audits of Federal Employees Health Benefits dependents to cut fraud

‍

2. Timeline & Who It Impacts

‍

‍

3. Why This Matters Financial Impact

‍

• Supplement elimination: Potentially a $90,000+ lifetime loss per retiree.
• Raised contributions for new hires: 5% more per paycheck, lowering take-home by ~$3,000/yr on a $60K salary.
• At-will vs protections: New hires choose between higher pension contributions or full job appeal rights—a structural shift in federal employment.
• Appeal fees: May discourage legitimate appeals—union leaders call it a threat to civil-service integrity

4. Stakeholder Reactions

‍

• AFGE: “Best wins”—high-3 and current rate protection retained. Still urges Senate to drop supplement cut and at-will provision
• NARFE & NTEU: Denouncing the “claw-back” of earned pension benefits, urging immediate action
• MarketWatch/MP union voices: Warn of the negative effects on retention and pension equity

5.  What You Can Do Right Now

‍

• Check if you're “entitled” by Jan 1, 2028—retire before or after makes a world of difference
• New hires: Understand the long-term consequences of losing civil-service protections.
• Seek financial advice: Connect with CFPs experienced in federal benefits—many offer free consultations
• Advocate now: Contact your Senators—NARFE and AFGE offer templates and contact tools
• Plan retirement timing carefully: Delaying even one day after 2028 could cost you the annuity supplement.

6. What’s Ahead

‍

• Senate action pending: Amendments expected. Senators like Mike Turner publicly oppose retroactive pension cuts
• White House positioning: Executive branch statements remain unclear—but the at-will provision ties into broader civil-service reform efforts.
• Implementation logistics: OPM will need guidance on “entitlement” definitions—ambiguity remains, so don’t assume your status

Bottom Line

The 2025 budget reconciliation bill launched with far-reaching pension cuts—but reforms narrowed its scope. What remains is still substantial: an eliminated annuity supplement, at-will vs contributions choice, and fees. Act early to protect your retirement and know your options.