Government Shutdown: 5 Key Things Federal Employees Must Know About Its Impact on Retirement Benefits

Whenever a government shutdown lingers, federal employees naturally worry about paychecks, job security, and how daily operations will be affected. But there’s another important angle many people forget to think about—how a shutdown might affect your retirement benefits.

If you’re a federal worker, here are five key things to keep in mind about how a shutdown could touch your TSP, FEHB, FEGLI, and pension.

Below are five of the most important things you should know about how a government shutdown could affect your federal retirement benefits.

Register for our free, educational webinar: Shutdown Uncertainty and Your Federal Retirement Benefits where we’ll cover all these topics in depth. 

1. Your Thrift Savings Plan (TSP) Contributions Could Be Interrupted

If you are furloughed and not receiving a paycheck, your TSP contributions—including agency matching under FERS—will be paused. That means you won’t be able to grow your retirement account during the shutdown period, and you may miss out on matching contributions if you don’t catch up later. While your existing TSP balance remains safe and invested as usual, the lack of new contributions could affect your long-term compounding growth.

Tip: Once the shutdown ends, consider adjusting your contributions to make up for the missed time if your budget allows.

2. FEHB Coverage Will Continue—but Premiums May Become an Issue

The good news is your FEHB health insurance coverage will not be immediately canceled during a shutdown. However, since premiums are normally deducted from your paycheck, furloughed employees will start to accrue an unpaid balance for their share of premiums. Once pay resumes, those deductions will be taken out retroactively.

Tip: Don’t panic if you see a gap in deductions on your paycheck during a shutdown—your coverage is still active, and providers will honor claims.

3. FEGLI Life Insurance Protection Stays in Place

Federal Employees’ Group Life Insurance (FEGLI) premiums are also typically deducted from paychecks. Fortunately, your coverage continues at no cost to you for up to 12 consecutive months of nonpay status, as long as you were in pay status before the shutdown began. This means you won’t lose life insurance coverage during a short-term shutdown.

Tip: Keep in mind that this protection does not last indefinitely, but for most shutdown scenarios, FEGLI coverage remains secure.

4. Federal Pensions Will Not Be Impacted Directly—but Timing Matters

If you’re already retired and receiving your federal pension, payments will continue since retirement checks are disbursed from the Civil Service Retirement and Disability Fund, which is not dependent on annual appropriations. However, if you’re in the process of retiring during a shutdown, you may face delays in processing your retirement paperwork. That could mean a temporary slowdown in your first annuity check or in finalizing your benefits package.

Tip: If you are planning to retire soon, keep in mind that OPM may face backlogs after a shutdown, so allow extra time for your paperwork to be processed.

5. Future Retirement Planning Could Be Disrupted

While the direct benefits may continue, the longer-term effects of a shutdown—such as missed contributions, delayed personnel actions, and postponed retirement counseling sessions—can throw a wrench into your planning. Federal employees nearing retirement may also find it harder to get timely answers from HR or OPM during and immediately after a shutdown.

Tip: Use this time to review your personal records, update your beneficiary forms for TSP and FEGLI, and ensure your retirement paperwork is in order so you’re not caught off guard later.

Bottom Line

A government shutdown creates uncertainty, but most core retirement benefits for federal employees—like FEHB, FEGLI, and pension payments—remain protected in the short term. The biggest risks come from missed TSP contributions, delayed processing of retirement paperwork, and the stress of financial disruption. By staying informed and taking proactive steps to safeguard your benefits, you can weather a shutdown without long-term harm to your retirement security.

Register for our free, educational webinar:

Shutdown Uncertainty and Your Federal Retirement Benefits

October 14th |  6:30pm ET + 30-min live Q&A

October 16th | 1:00pm ET+ 30-min live Q&A

During this webinar, we’ll discuss what this government shutdown means for your federal retirement benefits and how to maximize them:

• TSP Impacts and Maximization strategies
• FERS/CSRS Pension
• Special Retirement Supplement
• Survivor Benefits
• FEHB (Health Benefits)
• FEGLI (Life Insurance)
• Social Security Maximization
• Interactive 30-Min Q&A Session

Register Here