Public servants have one week left for early retirement incentive

The Early Retirement Incentive Program was created in an effort to mitigate layoffs in the federal public service as part of Prime Minister Mark Carney's spending review

More than 6,300 applications have been confirmed to meet the criteria, with many of those applications expected to be approved for early retirement, according to a federal government dashboard. However, department heads will have the final decision on what applications will be approved depending on operational needs. The early retirement incentive allows eligible public servants to retire early without incurring penalties to their pension.

Normally, employees who retire before meeting their age and service requirements would face pension reductions of five per cent for each year they retired early. The last possible day of employment for those taking the retirement package is set for Jan. 19, 2027, while the latest possible retirement day is Jan. 20, 2027. The Early Retirement Incentive program has been billed as a way for the federal government to mitigate the impact of layoffs within the federal public service.

The program has also been developed to mitigate the exit of younger generations of public servants, who often are the hardest hit when the federal government moves toward downsizing. “Canada’s government is managing workforce reductions with fairness and compassion, and in line with Canada’s obligations as an employer,” Mohammad Kamal, director of communications for Shafqat Ali, the president of the Treasury Board, said in a statement. “As proposed in Budget 2025, workforce reductions will be managed, to the greatest extent possible, through attrition and voluntary departures,” the statement added.

The program is also an avenue to reduce spending as the federal government aims to cut billions of operating budgets across most departments and agencies. 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.

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. The first group includes public servants who joined the federal government 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. The second group allows for public servants 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.

However, the federal government had to wait months to pass its budget bill before opening up the program to eligible public servants. The application window for the program began on March 26, 2026 and is set to end on July 24, which is a Friday. “We are encouraged by the level of participation in the program to date,” Kamal said in the statement.

“We will continue to support employees as they consider their options and make the decision that is right for them,” Kamal added. With files from Ben Andrews