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Hello everyone, I'm Ian Smith here with
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FedSmith.com. I'm bringing you breaking
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news today. The alternative pay plan
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letter that a lot of you've been waiting
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on is now out. It came out
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it was officially dated August 26, but
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it dropped this morning. We have an
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article on FedSmith.com about it. I'm
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going to give you all the details here
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in this short video though. So let's get
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right into it. Right out of the gate,
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the letter uh followed the White House's
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budget proposal and in so therefore it
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has proposed a pay freeze for most
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civilian federal employees in 2027.
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So that means no pay increase for base
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pay or locality again for most civilian
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federal employees. That is what
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President Trump proposed in his
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alternative pay plan letter. Also like
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last year, there are carve outs for
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certain federal employees. This year's
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alternative pay plan letter proposes a
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3.8% pay raise for federal employees in
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law enforcement positions and certain
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law enforcement positions. Again, this
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is the same approach as 2026
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and OPM, that's the Office of Personnel
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Management, will use a special uh rate
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authority to implement this.
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Um this will be a separate process from
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the alternative pay plan itself and OPM
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will determine which categories of law
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enforcement are eligible.
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Also, this follows the White House's
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budget proposal, but the but President
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Trump reiterated in the letter that
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there is a pay raise for members of the
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It's a tiered structure. It'll be 7% for
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E1 through E5, 6% for E6 through O3, and
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Um non-armed forces uniform services get
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a 3.6% raise. Again, this is consistent
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with the White House's 2027 budget
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proposal. Now again, this is part of the
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alternative pay plan letter. I'm not
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going to go into much detail on what the
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alternative pay plan is. If this would
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be of interest to you, let me know in
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the comments. I could always do a
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separate video that goes into a little
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more detail. But basically, it's under
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uh FEPCA, which is the Federal Employees
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Pay Comparability Act of 1990.
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Um it established a a formula for
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automatic annual pay adjustments.
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The formula would cost billions of
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dollars. No president has ever followed
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it. And it dictates that the president
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can instead override that formula with
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alternative pay plan citing economic
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conditions, and that's the case here.
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Uh Trump's letter for 2027 sites fiscal
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responsibility and calls the statutory
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formula increases irresponsible in the
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And notes that without the alternative
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pay plan, uh locality pay alone would
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that's all in the letter itself.
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Again, I've written an article on
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fedsmith.com that's got the full text of
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the letter in it. I'll leave a link to
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that in the description if you'd like to
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get all the details and read the entire
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letter. I'm certainly not going to read
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the whole thing to you here on the
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video. That would be way too long and
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One final note I want to make on this.
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This is This is all for the pay raise
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for federal employees or in this case
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lack of a pay raise next year for
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federal employees. This does not apply
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to retired federal employees. This is a
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question that comes up a lot.
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Um a lot of times retired federal
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employees will say, "Well, what about
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This This doesn't apply to federal
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retirees. That's the COLA, the cost of
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living adjustment. That is determined
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each year by an automatic formula. We'll
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know in roughly mid-October what that's
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going to be. It's based on the
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the CPI, the Consumer Price Index.
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And again, it's an automatic formula.
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It's not based on politics at all.
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Whereas the pay raise is determined each
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year by Congress and or the president.
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And current estimates for the 2017
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COLA are around 3.5 to 3.7%
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we won't know for sure until October
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what that's going to be.
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But Fed Smith will provide more updates
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on that as more information becomes
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available as well. But just wanted to
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briefly mention they're not the same
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thing. So that's a quick summation of
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the alternative pay plan letter that
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again just was just released. So I
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wanted to make sure I got this
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information out to you all as quickly as
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possible. I've left some links in the
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description and please check out those
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articles and visit fedsmith.com for more
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information. You can also sign up for
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our free email list there to get our
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news updates in your inbox. Thank you
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for watching today and I will see you
