One-year program expected to launch in January
The federal government is moving ahead with a major early retirement initiative for federal public servants as part of a plan to significantly reduce the size of the core public service by 2029, according to a report.
Ottawa is in the process of sending information about a voluntary early retirement program to nearly 70,000 employees, notes CBC. The measure is tied to the Liberals’ objective of cutting about 40,000 federal public service jobs from a peak of 368,000 positions in 2024, with roughly 16,000 reductions still to come by 2029, according to the report.
The early retirement option is intended to increase attrition and limit job cuts among younger workers. Mohammad Kamal, director of communications for the Office of the President of the Treasury Board, says letters are being sent to “roughly 68,000 public servants who may be eligible for the program,” according to CBC.
Budget 2025 marks a significant shift in the federal government’s approach to public sector management, with plans to reduce the size of the federal public service by about 40,000 positions — or 10 per cent — by 2028-29.
Contractual benefits, collective agreements
Under the early retirement proposal, employees will be able to apply if they are at least 50 years old, have a minimum of 10 years of employment and at least two years of pensionable service. CBC reports that, if approved, “they would be able to retire with an immediate pension based on years of service, with no penalty for leaving early.”
The federal government estimates the early retirement initiative will cost $1.5 billion over five years, with about half of that amount to be spent next year. CBC says the program is expected “to save taxpayers about $82 million annually, largely from pension contributions” once fully implemented.
According to the report, the government intends to launch the one-year program as early as Jan. 15, 2026. However, Kamal tells CBC that legislation is still required for the government to proceed.
Public servants are not required to take action at this time, according to the letter, seen by the Canadian Press (CP). The letter also indicated that the program will be available only to certain employees who apply to participate under parameters set by the Treasury Board.
“These parameters would be designed to maintain essential services and business continuity,” the letter said. “As such, acceptance of an employee’s application to participate would not be guaranteed.”
Union demands: honouring contractual benefits
The Public Service Alliance of Canada (PSAC) is calling on the federal government to release the details of the program.
“PSAC welcomes efforts to prevent involuntary layoffs,” the group says in a press release. “But any early departure program must be negotiated with the union and must honour the hard-fought contractual benefits enshrined in our collective agreements. We are pressing the government to meet with us to discuss the full details of the ERI. Once we have this information, we will provide further advice to members.”
Under the Public Service Superannuation Act, the Treasury Board can waive the pension reduction that normally applies when an employee retires before meeting the plan’s age and service requirements, notes the group.
“Normally, your pension is reduced by 5% for each year you retire early. For example, retiring five years early would mean a 25% reduction. However, during workforce adjustment or employment transition — including when you are laid off or alternate with someone who has been declared surplus — this reduction can be waived for eligible employees.”
Nearly half of Canadian workers are behind on retirement savings, yet the average Canadian still leaves the workforce at 59, according to a previous report.
To qualify, workers must meet all of the following conditions, according to PSAC:
- Workers retire involuntarily (this includes voluntary departure programmes and alternation);
- Workers are within five years of the pension eligibility age;
- Workers have two or more years of pensionable service;
- Workers have worked in the federal public service for at least 10 years in total.
Budget 2025 marks a significant shift in the federal government’s approach to public sector management, with plans to reduce the size of the federal public service by about 40,000 positions—or 10 per cent—by 2028-29.
