The Early Retirement Incentive program is set to slash departmental budgets by half the salary of each employee approved under the program, according to an internal document obtained by the Ottawa Citizen.
Through the formula, if a public servant made $100,000, then the department's budget would be reduced by $50,000. If dozens of public servants are accepted in one department, operational budget cuts could add up to millions of dollars.
The formula could see departments save hundreds of thousands on personnel spending, but may also kneecap operating budgets and worsen workload pressures for some departments.
Currently, around 2,800 public servants have already been approved for the program, while about 6,800 eligible public servants have applied. The deadline for the program is July 24, 2026, and some approvals are expected after that date.
Some departments have said they will not approve any early retirement incentives. CBC first reported that the Canadian Security Intelligence Service (CSIS) would not approve any early retirement, citing operational pressures. CBC also reported that the Royal Canadian Mounted Police, Canadian Border Services Agency employees working at border crossings, and employees at the Communications Security Establishment would also be shut out of early retirement incentives. It is unclear if other federal departments will bar their employees from applying for an early retirement package.
In a previous statement, Treasury Board spokesperson Rola Salem did not confirm or deny that operating budgets of departments will face reductions based on how many public servants are approved for the ERI program. Instead, Salem said that “to support the Government’s commitment to spend less on day-to-day government operations, ERI may also be used by departments to renew and realign their workforce through voluntary departures, over and above reductions from the comprehensive expenditure review, so they can operate more cost effectively.”
The Early Retirement Incentive program was announced in Budget 2025 as a way to curtail layoffs stemming from the federal government’s spending review, which will cut billions across most departments and agencies over the next several years. However, the federal government had to wait months to pass its budget bill before opening up the program to eligible public servants.
Last December, about 68,000 public servants received letters informing them they would be eligible for the early retirement packages if they fell into either of two groups: those who joined the public service on or before Dec. 31, 2012, are at least 50 years old and have at least two years of pensionable service and 10 years of employment; or those who joined the public service on or after Jan. 1, 2013, are at least 55 years old and have at least two years of pensionable service and 10 years of employment within the public service.
The federal government said the program will be sourced from the surplus within the Public Service Pension Plan and would cost about $1.5 billion.
