Ottawa Moves Ahead With Early Retirement Push for Federal Workers
So, here’s what’s unfolding right now in Ottawa: a massive early-retirement initiative has been set in motion, and more than 68,000 federal public servants have been notified about it. This whole effort is part of the federal government’s plan to significantly shrink the size of the public service over the next few years. It’s a major move, and the scale of it is being felt across departments.
The 2025 federal budget laid out a target to reduce the public service by roughly 30,000 positions over five years. That’s on top of the 10,000 jobs already trimmed recently. At its peak in 2024, the core federal public service reached nearly 368,000 employees, but those numbers have already started dropping. Now, to achieve the next phase of reductions, $1.5 billion has been earmarked to fund early-retirement incentives, and those incentives are now being communicated to workers through official letters.
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These letters—sent out earlier this week—explain that employees may be eligible for the early retirement program. The eligibility depends on factors like age, years of pensionable service, and total time working in the federal public service. Two groups have been identified: one for employees who joined the pension plan before 2013 and another for those who joined after. The key draw of the program is that the usual pension penalty for early retirement would be waived, which is a significant financial benefit compared to the standard five-per-cent-per-year reduction normally applied.
But here’s the big catch: the program can’t begin yet. It still needs Parliamentary approval through Bill C-15, the budget bill, which is only at second reading. With the House of Commons scheduled to rise for the holidays soon, it’s unlikely this program will legally take effect before then. Still, the letters were sent so employees can start understanding their options, and many are already using internal pension calculators to see what early retirement might mean for them.
Not everyone is celebrating this move. Unions are urging caution. The Public Service Alliance of Canada says no worker should feel pushed into retiring before they’re financially ready, and the union wants full details from the government before advising members. They’re reminding workers that accepting the incentive means giving up certain entitlements that would apply if layoffs occur instead—things like lump-sum payments tied to years of service or even position-swapping arrangements that help avoid layoffs.
Other unions warn that Ottawa could lose some of its most experienced workers just when their skills are needed most. They argue that pushing seasoned professionals out the door may weaken the effectiveness of government services at a time when capacity is already under pressure.
For now, federal employees are being asked to think carefully, understand their rights, and consult their union representatives. The government insists the process will be voluntary and structured, but the impact—on workers and on public service delivery—is only beginning to unfold.
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