The federal government has unveiled a comprehensive early retirement incentive program for public servants as part of its plan to reduce the federal workforce by 30,000 positions by 2028-29. The initiative, announced in Budget 2025, will draw from the Public Service Pension Plan's substantial $1.9 billion surplus to fund retirement buyouts.
Eligibility Requirements for Early Retirement
Public servants seeking to take advantage of the early retirement program must meet specific criteria. Those aged 50 or older who joined the public service before 2013 qualify, as do employees aged 55 or older who joined after 2013. Additionally, applicants must have at least 10 years of employment and two years of pensionable service to be eligible for retirement without penalty.
The program allows eligible public servants to retire with an immediate pension based on their years of service, eliminating the traditional penalties for early retirement. A Department of Finance official confirmed that participants must "leave the federal public service in accordance with and subject to the parameters of the program."
Funding Controversy and Implementation Timeline
The government's plan to utilize the pension fund surplus has sparked controversy. In November 2024, the government announced it was moving the "non-permitted surplus" into a general account, creating tension with public sector unions. Both sides accused each other of spreading misinformation about the surplus's handling.
Barb Couperus, a Treasury Board spokesperson, has confirmed that the surplus remains at $1.9 billion. However, the Treasury Board has declined to specify whether this surplus will directly fund the early retirement incentives.
The $1.5 billion early retirement incentive program is scheduled to run for five years, beginning in the 2025-2026 fiscal year. Implementation could start as early as January 15, 2026, pending royal assent of the budget legislation. A Department of Finance official stated that the government intends "to introduce these legislative amendments at the earliest opportunity."
Broader Workforce Reduction Strategy
This early retirement program represents a key component of the Liberal government's broader strategy to streamline the public service. The budget released on November 4 outlines plans to achieve most workforce reductions through attrition rather than layoffs.
The government emphasizes it will rely on attrition "to the greatest extent possible" while implementing age eligibility adjustments and financial incentives totaling $1.5 billion. This approach aims to minimize disruptive job cuts while achieving significant workforce reduction targets over the coming years.
