Federal retirement changes in 2026 were real but narrower than the headlines: the pension formula did not change, while COLAs, the TSP, and health premiums did.
Federal retirement changes in 2026 came mostly from indexing and administration, not new pension law. FERS annuities rose 2.0% and CSRS 2.8%, the TSP added in-plan Roth conversions on January 28, 2026, and FEHB enrollee premiums rose 12.3%. The House proposals to end the FERS supplement and adopt a high-5 were not enacted.
By Craig Wear, CFP® | Last reviewed: October 18, 2026
Key Takeaways
- FERS annuities rose 2.0% and CSRS annuities 2.8% for 2026, with the increase first paid in January (OPM).
- The One Big Beautiful Bill Act, Public Law 119-21, signed July 4, 2025, contains no FERS annuity supplement cut and no high-5; its only federal benefits section is the FEHB Protection Act, Sec. 90101 (GovInfo).
- Since January 28, 2026, TSP participants can convert traditional balances to Roth inside the plan, at least $500 per conversion and up to 26 a year (TSP.gov).
- Starting in 2026, TSP catch-up contributions must go to Roth for participants whose 2025 wages from TSP-eligible positions exceeded $150,000 (TSP.gov).
- Average FEHB enrollee premiums rose 12.3% for 2026 and will rise 10.9% for 2027; Open Season runs November 9 to December 14, 2026 (OPM).
- USPS suspended its employer FERS payments on April 10, 2026, about $200 million every other week, while service credit and TSP matching continue (USPS).
- The President's August 26, 2026 pay plan proposes a 0% 2027 General Schedule adjustment, which matters for anyone whose high-3 includes 2027 (House Document 119-189).
Federal Retirement Changes 2026 by the Numbers
Figures are from OPM primary releases as of October 14, 2026. The fiscal year 2026 claims total sums OPM's monthly reports for October 2025 through September 2026.
What federal retirement changes took effect in 2026?
Seven changes took effect for federal employees and retirees between January 2025 and October 2026, and none altered the FERS or CSRS annuity formula. They were inflation adjustments, a Social Security repeal, TSP features, health-plan rules, and agency funding actions.
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| Change | Effective | Who it affects | Status |
|---|---|---|---|
| 2026 COLA: FERS 2.0%, CSRS 2.8% (OPM) | December 2025, paid January 2026 | Annuitants and survivors | In force |
| WEP and GPO repealed by the Social Security Fairness Act (SSA) | Benefits payable January 2024 and later | CSRS retirees and spouses | In force |
| TSP in-plan Roth conversions (TSP.gov) | January 28, 2026 | Active and separated participants, spouse beneficiaries | In force |
| Roth-only catch-up above $150,000 of 2025 wages (TSP.gov) | January 1, 2026 | Participants 50 and older | In force |
| FEHB and PSHB family-member verification (Sec. 90101) | Open Season for plan year 2027 | Enrollees adding a family member | In force |
| USPS employer FERS payment suspension (USPS) | April 10, 2026, announced through fiscal year end (September 30, 2026) | Postal Service funding of the FERS trust fund | Taken; no benefit change |
| 1.0% across-the-board GS raise for 2026 (OPM) | First pay period of 2026 | GS employees; high-3 calculations | In force |
The WEP and GPO repeal is the change with the largest dollar effect for CSRS households, and it is covered in depth in our guide to whether federal employees get Social Security. In short, the Social Security Administration reports it completed more than 3.1 million retroactive payments totaling about $17 billion by July 2025.
Did the One Big Beautiful Bill Act cut FERS retirement benefits?
No. The enacted law, Public Law 119-21, does not change the FERS annuity supplement, the high-3 average, or employee FERS contribution rates. Its Title IX Governmental Affairs subtitle contains only three sections, and the one touching federal benefits is the FEHB Protection Act of 2025.
The House version did carry real cuts. Reading the House-passed text of H.R. 1 against the enacted text shows exactly which provisions fell away between May 22, 2025 and July 4, 2025.
| Provision | House-passed bill (May 22, 2025) | Enacted law (July 4, 2025) |
|---|---|---|
| End the FERS annuity supplement for most new retirees from January 1, 2028 | Included (Sec. 90001) | Dropped |
| New hires choose at-will status or pay 5 more percentage points into FERS | Included (Sec. 90002) | Dropped |
| Filing fee for Merit Systems Protection Board appeals | Included (Sec. 90003) | Dropped |
| FEHB family-member verification and dependent audit | Included (Sec. 90004) | Enacted (Sec. 90101) |
| High-3 replaced by high-5; higher FERS contributions for all | Not in House-passed text (spring 2025 drafts only) | Not enacted |
A common misconception is that the supplement cut was merely delayed to 2028. It was not delayed; it was removed. The 2028 date appeared only in the House-passed text, which never became law. The law did enact tax changes that reach federal retirees, including a temporary $6,000 deduction for taxpayers 65 and older, summarized in our OBBBA retirement tax guide.
How much did federal annuities rise in 2026, and what decides the 2027 COLA?
CSRS annuities rose 2.8% and FERS annuities 2.0% for 2026, because FERS uses a capped formula. Per OPM, when the CPI-W rises 2% or less the FERS COLA equals the CPI-W; between 2% and 3% it is 2%; above 3% it is the CPI-W increase minus one percentage point.
Worked example (hypothetical): a retiree drawing a $36,000 annuity in December 2025 would receive $36,720 a year under FERS (age 62 or older) and $37,008 under CSRS. A regular FERS retiree under 62 generally receives no COLA at all, while disability retirees, survivors, and special-provision retirees such as federal law enforcement officers are exempt from the age-62 wait.
| CPI-W increase (Q3 over Q3) | CSRS and Social Security COLA | FERS COLA |
|---|---|---|
| 1.8% (hypothetical) | 1.8% | 1.8% |
| 2.8% (actual, for 2026) | 2.8% | 2.0% |
| 3.6% (actual, for 2027) | 3.6% | 2.6% |
The 2027 COLA is set from third-quarter 2026 CPI-W data. On October 14, 2026, SSA announced a 3.6% increase for Social Security beneficiaries beginning in January 2027 (SSA COLA information). CSRS annuities rise by the same 3.6%. Because the increase is above 3%, the FERS formula gives FERS annuitants one point less, a 2.6% increase, and FERS retirees generally receive it only from age 62 (law enforcement and other special-category retirees excepted). The Social Security side is explained in our 2026 Social Security COLA guide.
What changed in the TSP for 2026?
Three TSP changes took effect for 2026: higher contribution limits, mandatory Roth treatment of catch-up contributions for higher earners, and in-plan Roth conversions. The elective deferral limit is $24,500, with an $8,000 catch-up at 50 and $11,250 at ages 60 to 63.
The Roth catch-up rule applies when prior-year wages from TSP-eligible positions exceed a threshold, $150,000 for 2025 wages. Wages from outside employers are not counted, and the TSP switches qualifying contributions to Roth automatically once the regular limit is reached.
The bigger planning change is the in-plan Roth conversion. Conversions are irrevocable, cannot be paid from the converted money, and carry no withholding, so estimated tax payments may be needed. Non-spouse beneficiaries cannot use it. Mechanics, five-year rules, and the TSP-versus-IRA choice are covered in our TSP Roth conversion guide.
How are FEHB and PSHB premiums and family-member rules changing?
Average enrollee premiums rose 12.3% for FEHB and 11.3% for PSHB in 2026, and OPM projects smaller increases of 10.9% and 8.2% for 2027. Open Season for plan year 2027 runs November 9 to December 14, 2026, according to OPM's 2027 Open Season highlights.
The rule change is documentation. Beginning with this Open Season, anyone adding a new family member to an FEHB or PSHB plan must submit proof of eligibility. Section 90101 also requires OPM to run a three-year audit of covered family members, starting one year after enactment, and to remove ineligible enrollees.
Retirees approaching 65 often weigh FEHB alongside Medicare Part B, whose standard 2026 premium is $202.90 a month. The full cost picture is in our 2026 Medicare cost guide.
How do the 2026 pay raise and the proposed 2027 freeze affect a FERS pension?
They lower the high-3 for anyone retiring in the next few years, because the high-3 averages the three highest consecutive years of basic pay. The 2026 General Schedule raise was 1.0%, and the August 26, 2026 alternative pay plan proposes 0% for 2027 base and locality pay, with a separate 3.8% for law enforcement. For dollar figures by grade, see FERS pension tables for GS-11 to GS-15.
Worked example (hypothetical): an employee earning $118,800 in 2025 receives the 1.0% raise ($119,988 in 2026) and a 2027 freeze. Retiring at the end of 2027 at 62 with 30 years, the high-3 is $119,592 and the annuity at the 1.1% multiplier is $39,465 a year. With a hypothetical 3.1% 2027 raise instead, the high-3 would be $120,832 and the annuity $39,875, about $410 a year more before COLAs.
The freeze is a proposal until final pay schedules are issued, and Congress can set a different figure in appropriations. The formula itself is explained in FERS retirement explained.
What did deferred resignation, VERA, and the retirement surge change at OPM?
They produced a surge in retirement applications and a temporary OPM backlog that has largely cleared. GAO reports that the 2025 deferred resignation period ended September 30, 2025, or December 31, 2025 for employees with a planned retirement date, and that agencies could pair it with early-out (VERA) and buyout (VSIP) offers, with VSIP payments capped at $25,000.
OPM's monthly processing reports show 179,958 new retirement claims in fiscal year 2026, peaking at 31,240 in February 2026, when inventory reached 65,237. By September 2026 inventory was down to 8,814 and the average processing time that month was 66 days, 56 for digital claims. GAO report GAO-26-108477 estimates $6.7 billion of 2025 paid administrative leave salary costs was associated with the deferred resignation program.
For postal employees, the April 2026 USPS decision to stop employer FERS payments is a funding action, not a benefit cut; the details are in our USPS pension guide. Employees who left before retirement eligibility may find it useful to review FERS deferred retirement, because separation timing changes FEHB and COLA rights.
Which federal retirement proposals are still pending?
Several proposals are live but not law as of October 14, 2026, and none should be treated as certain. The useful test is whether a change appears in a signed public law or a final agency rule.
| Proposal | What it would do | Status (October 2026) |
|---|---|---|
| 2027 alternative pay plan | 0% GS base and locality raise; 3.8% for law enforcement | Proposed by the President; final when 2027 pay schedules are issued |
| Equal COLA Act, H.R. 491 and S. 624 | Give FERS annuitants the full CSRS and Social Security COLA | Introduced January 2025; not enacted |
| FERS supplement elimination, high-5, contribution increases | Reduce or end pre-62 supplement; average five years of pay | Dropped from 2025 law; could return in future budget bills |
| OPM administrative leave rule | Codify paid leave for deferred resignation and workforce reductions | Proposed rule published June 29, 2026 |
Where do Roth conversions fit after the 2026 changes?
The 2026 changes make Roth conversions easier to execute for federal employees and, for some, more important to time. The TSP in-plan option removes the need to roll money to an IRA first, and Roth-only catch-ups mean many higher earners now hold some Roth TSP money by default.
The senior deduction adds a timing wrinkle. For a hypothetical married couple, both 66, with $150,000 of modified AGI, a $30,000 conversion would reduce each spouse's $6,000 deduction by $1,800 to $4,200, because it phases out at 6% of income above $150,000. That interaction is covered in Roth conversions and the senior deduction phase-out.
Federal retirees between separation and 62, or before RMDs begin at 73 or 75, often have lower taxable income than in their working years. Retirees in a low-bracket year often consider partial conversions that stay within a chosen bracket, such as the 24% bracket that tops out at $403,550 for joint filers in 2026, and a professional can model the effect on IRMAA and Social Security taxation.
Frequently asked questions
Did federal retirement benefits change in 2026?
Yes, but mostly through indexing and administration rather than new pension law. FERS annuities rose 2.0% and CSRS annuities 2.8%, the TSP added in-plan Roth conversions on January 28, 2026, catch-up contributions became Roth-only for higher earners, and FEHB enrollee premiums rose an average 12.3%. The FERS pension formula itself did not change.
Was the FERS supplement eliminated by the One Big Beautiful Bill Act?
No. The House-passed version of H.R. 1 (May 22, 2025) would have ended the FERS annuity supplement for most new retirees starting January 1, 2028, but that section is not in the enacted law, Public Law 119-21. Eligible retirees who leave before 62 still receive the supplement under current law.
Is the FERS high-3 changing to a high-5?
No. A high-5 average was reported in spring 2025 draft proposals but was not in the House-passed bill text or the enacted law. As of October 2026, FERS and CSRS annuities are still computed on the high-3 average salary. Proposals can return in future budget bills, so they are treated here as scenarios rather than certainties.
What is the FERS COLA for 2026?
The FERS COLA for 2026 is 2.0%, and the CSRS COLA is 2.8%, matching the 2.8% Social Security increase. Under the FERS rule, when the CPI-W rises between 2% and 3%, FERS annuitants receive 2%. Most regular FERS retirees receive COLAs only from age 62, with exceptions such as disability and special-provision retirees.
Will federal employees get a pay raise in 2027?
Not under the current proposal. In an August 26, 2026 alternative pay plan letter, the President set the 2027 General Schedule base and locality adjustment at zero, with a separate 3.8% increase directed for law enforcement personnel. Congress can still legislate a different figure, so the final 2027 rate is not settled until pay schedules are issued.
Can federal employees convert their TSP to Roth now?
Yes. Since January 28, 2026, active and separated participants can convert traditional TSP money to Roth inside the plan. Each conversion must be at least $500, up to 26 conversions are allowed per calendar year, conversions cannot be reversed, and the tax must be paid from money outside the TSP because no withholding is allowed.
Does the USPS FERS payment suspension reduce postal pensions?
According to the Postal Service, no. USPS stopped its employer FERS payments on April 10, 2026 to conserve cash, but employees' FERS deductions are still sent to OPM, employees continue to earn service credit, and TSP matching continues. CSRS employees and current retirees are not affected.
Do I need documents to add a family member to FEHB in 2027?
Yes. Under the FEHB Protection Act of 2025, anyone adding a new family member to an FEHB or PSHB plan during the Open Season for plan year 2027 (November 9 to December 14, 2026) must submit documentation proving that person's eligibility, such as a marriage or birth certificate.
Methodology: Enacted versus proposed status was determined by comparing the House-passed text of H.R. 1 (May 22, 2025) with the enacted text of Public Law 119-21 on GovInfo. COLA figures and the FERS COLA rule come from OPM; WEP and GPO repeal figures from SSA; TSP rules from TSP.gov; FEHB and PSHB premium and Open Season data from OPM's 2027 Open Season highlights; postal funding facts from USPS; workforce program facts from GAO-26-108477; processing data from OPM's monthly retirement processing reports; and the 2027 pay proposal from House Document 119-189. Worked examples use hypothetical salaries and annuities and are labeled as such. The 2027 COLA figures (3.6% for Social Security and CSRS, 2.6% for FERS) were added on October 18, 2026, after SSA’s October 14 announcement. Because this is a YMYL topic, anonymous forum anecdotes and unsourced projections were excluded.
This article is for educational purposes only and is not individualized investment, tax, or legal advice. Consult a qualified professional about your specific situation.
