Early retirement incentives to reduce department operating budgets

About 2,800 public servants have already been approved for the Early Retirement Incentive program, while about 6,800 eligible public servants have applied. Photo by Jean Levac /Postmedia

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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.

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Through the formula, if a public servant made $100,000, then the department’s budget would be reduced by $50,000.

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If dozens of public servants are accepted in one department, operational budget cuts could add up to millions of dollars.

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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.

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Currently, around 2,800 public servants have already been approved for the program, while about 6,800 eligible public servants have applied.

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The deadline for applications to the program is July 24, 2026, and some approvals are expected after that date.

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Some departments have said they will not approve any early retirement incentives.

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CBC first reported that the Canadian Security Intelligence Service (CSIS) would not approve any early retirements, citing operational pressures.

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CBC also reported that the Royal Canadian Mountain 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.

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It’s unclear if other federal departments will bar their employees from applying for early-retirement packages.

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In a previous statement, Treasury Board spokesperson Rola Salem did not confirm or deny that operating budgets of departments would face reductions based on how many public servants were approved for the ERI program.

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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.”

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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.

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However, the federal government had to wait months to pass its budget bill before opening up the program to eligible public servants.

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The federal government said the program would be sourced from the surplus within the Public Service Pension Plan and would cost about $1.5 billion.

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