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Key developments in the world of federal employee benefits: health, pay, and much more.

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Federal employees for months have heard conflicting arguments about whether they are overpaid and what size raise they should receive in 2011. But the Obama administration this week took steps to settle those questions.

The president on Monday proposed a pay freeze for 2011 and 2012 that will apply to all civilian workers, including Defense Department employees, but not to military personnel. Workers still will be eligible for step increases and promotions, officials said.

According to the White House, the freeze will save $28 billion during the next five years and $60 billion through 2020. Obama previously proposed a 1.4 percent pay hike for civilian and military employees in his fiscal 2011 budget, but lawmakers have shown little agreement on the issue of federal pay. Congress must act in order for the freeze to take effect, however, and there has been only tentative opposition from lawmakers on the proposal.

In addition to a freeze on base pay, civilian government workers will see no locality increases in 2011, the president said Tuesday.

Lawmakers, union leaders and other observers have raised a number of concerns about freezing federal salaries. For example, the proposal unfairly singles out government workers and places an unequal burden on civilian employees by sparing military personnel the freeze.

The pay freeze also could make it hard for agencies to recruit and retain top talent for federal jobs and could spur early retirements, they said.

 
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