Question Period Note: Early Retirement Incentive Program

How will the recently implemented early retirement incentive program announced in Budget 2025 help manage workforce reductions?

• The government is 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 voluntary departures, a temporary Early Retirement Incentive program allows eligible employees to apply for early retirement without the normal penalty.
• This program is funded from the Public Service Pension Plan and designed to maintain essential services and business continuity.
• With the passing of the Budget Implementation Act in March, the application period for the program is now open and eligible employees may apply until July 24, 2026.

The government has committed to returning the federal public service population to a more sustainable level of 330,000 from close to 368,000 in 2023-2024 as part of its Comprehensive Expenditure Review.

To manage workforce reductions through voluntary departures to the greatest extent possible, the government introduced an Early Retirement Incentive. Normally, when an employee retires before meeting the age and service requirements for an immediate annuity, their pension is permanently reduced by 5% for each year they retire early. Under this program, eligible employees can apply to retire with an immediate pension based on years of service, with no reduction for retiring early.

With the passing of the Budget Implementation Act on March 26, 2026, the application period for the Early Retirement Incentive is now open and eligible employees have until July 24, 2026, to apply.

Letters have been sent to approximately 69,000 employees who may meet the program’s age, pensionable service, and employment criteria to inform them that they may be eligible to apply. To be eligible to apply to the Early Retirement Incentive program, employees must meet the following eligibility parameters and retire no later than January 20, 2027.

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

Deputy Heads must confirm that the following criteria are met in order for an eligible employee’s application for the Early Retirement Incentive program to be accepted. These criteria were approved by the Treasury Board as follows:
• The organization needs to reduce its workforce
• Services to Canadians will be maintained
• Current and future operational or business needs will continue to be met

As established by the Treasury Board, the Early Retirement Incentive is not available to employees who are entitled to a separation benefit under the terms of any workforce adjustment or employee transition instruments or provisions.

The Early Retirement Incentive is a different program than the existing pension waiver available under the Public Service Superannuation Act under certain conditions, such as workforce adjustment. Employees who resign or are laid off because of a workforce adjustment or career transition situation may be eligible for an existing pension waiver.

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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