The OPM announcement marks the first time in four years that the annual increase has not been more than 10 percent.
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Both sides upbeat after a day of discussions about the pending National Security Personnel System.
Opinions diverge on what will happen if new overtime regulations are applied to the federal workforce.
Treasury may seek to avoid the limit by temporarily suspending investments in federal retirement funds.
Former congressman pushes for laws making it easier for the government to hire and retain quality personnel to help fight the war on terrorism.
Senate Appropriations subcommittee votes to give federal workers a 3.5 percent pay raise in 2005.
The F Fund, which invests in fixed-income securities, showed the largest gains.
Agency offers guidance on excused absences and premium pay for emergency overtime work.
Union leaders appealed to Congress Wednesday to restart personnel talks with the Defense Department and also leveled harsh accusations, calling the National Security Personnel System a front for outsourcing government jobs.