On Saturday, June 28th, the Senate voted 51-49 to launch debate on the "One Big Beautiful Bill" (OBBB), Republicans’ sweeping budget reconciliation package including tax extensions, spending cuts, and defense/security funding. Crucially, the Senate parliamentarian has ruled that most of the provisions within the bill—including several key provisions aimed at reducing federal employee/retiree benefits– violate the Byrd Rule, meaning they must be removed or the bill will require passage via a 60‑vote approval (as opposed to a simple majority vote). As a result, key proposals targeting Feds have been stripped from the Senate version of the bill.
Senate-Removed Provisions:
- Proposed FERS annuity calculation changes ("High‑5") have officially been dropped. Current and future retirees will see no change from the current High‑3 formula used in the calculation of their FERS pension benefit.
- The elimination of the FERS Supplemental annuity for federal retirees under 62 has been removed. Homeland Security and Governmental Affairs Committee Republicans, led by Chairman Rand Paul, R-KY, removed the provision that would have eliminated the FERS Supplement.
- The civil service vs. at‑will hire surcharge has been removed for current employees. There may be a catch here. The Senate appears to still be considering other changes to FERS contributions for new hires. New employees could potentially end up paying 9.4% toward FERS if they served on an at-will basis and nearly 15% if they wished to accrue civil service protections.
- The MSPB appeal fee provision has been eliminated. There will be no $350 charge to file an appeal.
- Union/Official‑time fees have likewise been struck from the bill.
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The bottom line for Feds? Many of the benefit‑targeted cuts initially proposed in the House version of the OBBB have been removed from the Senate’s version heading into floor debate. That’s good news.
What Feds Should Know and Watch For:
- Your current retirement benefits are safe—for now. With no final vote yet and major protections restored in the Senate, nothing’s changed yet—but stay alert.
- Retirees already receiving the FERS supplement are unaffected. Any cuts would only apply to future retirees after enactment.
- New hires still could face changes. Keep an eye on negotiations over whether at-will 9.4%-15% FERS contributions survive reconciliation.
- Ongoing advocacy is key. Groups like AFGE and NARFE are urging both chambers to eliminate all Feds-targeted provisions.
What’s Next?
The Senate reconciliation vote is expected to take place ahead of the July 4th deadline. Conference negotiations between the House and Senate will determine the final version of the bill in the weeks following. Once both houses of Congress have approved the bill, it will head to the President’s desk, to be officially signed into law.
So far, the Senate has successfully removed most of the cuts directly targeting federal employees and retirees—but none of this is final until both chambers agree. We urge Feds to keep an eye out for the final legislative text, stay tuned to updates, and plan accordingly around retirement timing and new hire policies.
**Written by Katelyn Murray, CFP®, ChFEBC®, FBS®, CFT-1™, ECA. The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Katelyn Murray and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **
