Insight by FEBA
What feds should know: 5 ways a government shutdown could affect your retirement benefits
Here are five essential points federal employees should keep in mind about the potential effects of a government shutdown on their retirement security.
November 6, 2025 12:15 pm
3 min read
Whenever the words “government shutdown” hit the news, federal employees understandably feel a knot in their stomachs. Many federal workers immediately focus on whether they’ll be paid and how daily operations will be impacted. But one area that often doesn’t get enough attention is how a shutdown may influence your long-term retirement benefits. If you’re a federal employee, it’s important to know how your Thrift Savings Plan (TSP), Federal Employees Health Benefits (FEHB), Federal Employees’ Group Life Insurance (FEGLI), and your federal pension may be impacted.
Below are five essential points federal employees should keep in mind about the potential effects of a government shutdown on their retirement security.
Register for our free, educational webinar: Shutdown Uncertainty and Your Federal Retirement Benefits where we’ll cover all these topics in depth.
1. TSP Contributions and Matching May Pause
During a furlough without pay, employee contributions to the TSP stop, and so do agency matching contributions under FERS. While the money already in your account continues to stay invested, no new contributions will be added until pay resumes. This temporary pause can reduce growth over time since you miss out on both contributions and compound earnings.
Consideration: After the shutdown, you may want to slightly increase contributions to make up for lost time if your budget allows.
2. FEHB Insurance Coverage Remains, but Premiums Are Delayed
Your FEHB health insurance does not end during a shutdown. Even if you’re not receiving a paycheck, your coverage stays active and providers will continue to process claims. What changes is how your premiums are handled—your share of the cost will be “caught up” through paycheck deductions once the government reopens.
Consideration: Expect larger-than-normal deductions after a shutdown ends to cover unpaid premiums.
3. FEGLI Life Insurance Protection Stays Secure
FEGLI premiums are also normally taken from paychecks, but your life insurance protection continues automatically for up to 12 months of nonpay status. That means you keep your coverage at no cost during short-term shutdowns.
Consideration: For most employees, FEGLI isn’t something to worry about unless a shutdown drags on unusually long.
4. Federal Pension Payments Continue, but Processing May Slow
If you’re already retired, you’ll continue to receive your annuity since payments come from a fund not dependent on annual appropriations. However, for employees submitting retirement applications around the time of a shutdown, there may be processing delays at OPM. This can postpone the start of your first retirement check or other benefit adjustments.
Consideration: If you’re nearing retirement, plan for the possibility of longer wait times on paperwork and benefit finalization.
5. Planning and Support Resources May Be Interrupted
Even though most benefits continue, a shutdown can slow down HR support, retirement counseling sessions, and access to agencies that help you plan for retirement. Combined with missed TSP contributions, these disruptions can create challenges for employees trying to finalize retirement timelines.
Consideration: Use any downtime to update personal files, check beneficiary forms for TSP and FEGLI, and get your paperwork ready so you’re not delayed later.
Final Thoughts
While shutdowns are stressful, most core retirement protections for federal employees—like FEHB, FEGLI, and pension checks—remain intact. The biggest impacts usually come from delayed contributions to TSP, administrative slowdowns, and short-term financial strain. By staying organized and prepared, you can minimize the effects and keep your retirement plan on track.
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