Question Period Note: Early Retirement Incentive Program

When will the government implement the voluntary early retirement incentive program announced in Budget 2025, and how will it help manage workforce reductions?

• Budget 2025 identifies savings that will contribute to returning the size of the public service to a more sustainable level of roughly 330,000 employees.
• To manage these reductions to the greatest extent possible through attrition and voluntary departures, Budget 2025 proposes to offer an Early Retirement Incentive program through the Public Service Pension Plan.
• Following Royal Assent of associated legislation, eligible public servants may apply to participate and approval would be subject to parameters set by Treasury Board.
• These parameters will be designed to maintain essential services and business continuity.

As announced by the Minister of Finance on November 4, 2025, Budget 2025 proposes to amend the Public Service Superannuation Act and Income Tax Regulations to offer a temporary, voluntary Early Retirement Incentive program through the federal public service pension plan. As part of the Comprehensive Expenditure Review, the Government committed to manage reductions to the greatest extent possible through attrition and voluntary departures. The Early Retirement Incentive program will support this objective by creating a voluntary mechanism for public servants to apply to receive an unreduced pension up to five years earlier than would otherwise be available subject to parameters set by the Treasury Board. These parameters would be designed to maintain essential services and business continuity. As such, acceptance of an employee’s application to participate would not be guaranteed.

Typically, when an employee retires before the age and service requirements, their pension is permanently reduced. The reduction is 5% for each year of early retirement. Under this program, the pension reduction would be waived for eligible public servants who apply to depart the public service. If approved by Parliament, this voluntary incentive program would be available to certain federal public service pension plan members who are eligible to apply under the parameters set by the Treasury Board and who meet the following initial criteria:

Group 1: Members who joined the public service pension plan on or before December 31, 2012 and who
• Are at least 50 years old
• Have at least 2 years of pensionable service
• Have at least 10 years of employment in the public service

Group 2: Members who joined the public service pension plan on or after January 1, 2013 and who
• Are at least 55 years old
• Have at least 2 years of pensionable service
• Have at least 10 years of employment in the public service

Implementation would proceed by January 15, 2026, or when legislation receives Royal Assent, and the government intends to conclude the ERI process within one year.

This program, which will be sourced from the Public Service Pension Fund, is estimated to have a net fiscal impact of $1.5 billion over five years, starting in 2025-26, while providing ongoing savings of $82.0 million annually.

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