The Canadian government plans to use public servants’ own pension money to fund early retirement buyouts for 68,000 workers, a decision unions are calling “borderline theft.”
The $1.5 billion program, announced in letters distributed last week, would allow eligible federal employees to retire early without penalties as Ottawa pursues 40,000 job cuts from a peak of 367,772 employees in 2024. But the decision to source funding from the Public Service Pension Fund has ignited fierce criticism from labor groups who say younger workers will subsidize their older colleagues’ departures.
“It’s all well and good to protect the jobs of younger people, but they are the ones who, throughout their careers, will pay half the cost of the program through their contributions to the pension plan,” said Nathan Prier, president of the Canadian Association of Professional Employees. “In the same vein, the government is using civil servants’ money as if it were its own, which sounds like borderline theft.”
Federal regulations normally impose a 5% annual reduction on benefits for civil servants who leave before reaching retirement age. The new program would eliminate this penalty for eligible participants.
Two categories of employees received the letters. The first group includes workers aged 50 or older with at least 10 years of federal employment and two years of pensionable service. The second covers employees 55 and older who joined the pension plan after January 1, 2013, meeting the same service requirements.
Treasury Board communications director Mohammad Kamal said notification letters reached about 68,000 employees who may qualify for the program. The government estimates the program will save $82 million annually in pension contributions once fully implemented.
The Public Service Alliance of Canada, representing the largest federal public service union, raised separate concerns about the program’s structure. National president Sharon DeSousa said workers considering early retirement might forfeit lump-sum severance payments based on years of service.
“That’s real money owed to workers under the collective agreement that this government seems to be trying to bypass,” DeSousa said in a statement released last week. She added that any early departure program must be negotiated with unions and warned members against making hasty decisions.
DeSousa told reporters in November she does not expect significant uptake given current cost of living pressures. The union is pressing the government to release complete program details before members commit to participation.
The Professional Institute of the Public Service of Canada echoed concerns about institutional knowledge loss. President Sean O’Reilly said the program would drive out experienced professionals rather than retaining talent.
“Let’s be clear: this program will drive out some of the most experienced people in the federal public service,” O’Reilly said. “Instead of retaining talent, the government is actively incentivizing its most seasoned professionals to leave. That should concern anyone who cares about effective government.”
The letters sent to employees emphasize that the program is voluntary and note that acceptance of applications is not guaranteed. Treasury Board will set parameters designed to maintain essential services and business continuity, according to the letter reviewed by media outlets.
The government plans to launch the one-year program as early as January 15, 2026, though Kamal confirmed legislation is still required before implementation. The application window would remain open for 120 days following the program’s start or legislative approval, whichever comes later.
Employees whose applications receive approval must retire within 300 days. The letters direct workers to internal pension calculators for personalized projections and caution that the Pension Centre is experiencing increased call volumes.
The federal workforce reached 367,772 employees in 2024 before falling to 357,965 this year through attrition. Budget 2025 targets further reductions to approximately 330,000 positions by 2028-29, a 10% decrease from peak levels.
Kamal did not respond to questions about whether departments would announce job cuts before gauging employee interest in voluntary departures. He said departments will manage workforce reductions through attrition and voluntary programs to the greatest extent possible, working to reassign employees where feasible.
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