Ottawa informs 68,000 workers of early-retirement incentives in bid to shrink public service

Open this photo in gallery:

The 2025 federal budget promised to reduce the size of the public service.Sean Kilpatrick/The Canadian Press

Letters have been sent to around 68,000 public servants this week to inform them about early-retirement incentives as part of Ottawa’s push to shrink the size of the federal government.

The Nov. 4 budget announced a plan to reduce the size of the public service by about 30,000 people over five years, in addition to a recent cut of about 10,000 jobs.

The size of the core public service reached a peak of 367,772 employees in 2024 before falling to 357,965 this year.

The budget announced that $1.5-billion would be made available to fund early-retirement incentives as a way of meeting the staff-reduction targets.

Unions warn federal budget proposal could lead to pension cuts for government workers

Mohammad Kamal, a spokesperson for Treasury Board President Shafqat Ali, confirmed the letters have been sent.

“As proposed in Budget 2025, workforce reductions will be managed to the greatest extent possible through attrition and voluntary departures. The Early Retirement Initiative is proceeding with an emphasis on voluntary, structured options to retire early with clarity and predictability,” he said in a statement.

A copy of one of the letters viewed by The Globe and Mail is titled “Proposed Early Retirement Incentive Program” and provides three pages of information.

The letter states that the recipient “may be eligible” to participate in the program announced in the budget based on a preliminary assessment of age, pensionable service and employment criteria.

It also says the program is not yet available as it is subject to legislative approval by Parliament.

Bill C-15, the budget bill, is being debated at second reading and appears highly unlikely to become law before the House of Commons rises for the holidays on Dec. 12.

Federal budget 2025: Carney earmarks $89.7-billion in new spending to counter U.S. protectionism

The letters say the program will have two eligible groups. Group 1 is for employees who joined the public-service pension plan on or before Dec. 31, 2012, who are at least 50 years old, have at least two years of pensionable service and have at least 10 years of employment in the public service.

Group 2 is for members of the public service pension plan who joined the pension plan on or after Jan. 1, 2013, and who are at least 55, with at least two years of pensionable service and at least 10 years of federal government employment.

The incentive would waive the penalty for early retirement.

Typically, an employee who retires before meeting age requirements faces a permanently reduced pension of five per cent for each year of early retirement.

The letter points employees to an internal pension calculator to receive personalized projections.

The letter concludes by providing the contact information for the government’s pension centre.

“Please note that the Pension Centre is experiencing increased call volume and wait times may be longer than usual,” it says.

Federal budget 2025: Ottawa looks to spur private investment with tax breaks, infrastructure spending

Public Service Alliance of Canada President Sharon DeSousa has previously expressed concern that some workers may feel pressure to retire early when they are not ready from a personal financial perspective.

Ms. DeSousa, who heads the largest federal public-service union, said PSAC has not yet received the full details of the program.

“PSAC supports efforts to prevent involuntary layoffs. But any early departure program must be negotiated with the union, because no one should be pressured into giving up hard-fought rights. We are pushing the government to meet with us and release the full details so we can properly assess what this means for workers,” she said.

“Until then, we urge members to consider their options closely, know their rights, and talk to their union representative before making any decision about early retirement.”

In a note to members Wednesday, PSAC said that in the event that Ottawa moves ahead with layoffs, the union has negotiated a process called work-force adjustment that would take effect.

The note points out that accepting an early retirement incentive would mean an employee is not entitled to a lump-sum payment based on years of service that could apply to affected workers via those work-force adjustment rules.

Those rules also allow for employees to “swap” positions, officially called alternation, avoiding a direct layoff in cases where one of the employees wants to voluntarily leave the public service early.

The minister’s office said the early-retirement incentive is an additional option for employees and is not intended to replace the work-force-adjustment process.

Sean O’Reilly, President of the Professional Institute of the Public Service of Canada, said the early-retirement incentives will mean the loss of important skills.

“Let’s be clear: this program will drive out some of the most experienced people in the federal public service. Instead of retaining talent, the government is actively incentivizing its most seasoned professionals to leave,” the union leader said in a statement.

“That should concern anyone who cares about effective government.”