The federal government is introducing early retirement incentives for public servants as part of its budget plan. The initiative will draw from the Public Service Pension Plan, which currently has a surplus of $1.9 billion. This announcement was made on November 4, as the Liberal government outlined its strategy to reduce the federal public service workforce by 30,000 jobs by the fiscal year 2028-29.

To achieve this reduction, the government plans to utilize attrition as much as possible. This will involve lowering the age eligibility requirements for retirement and providing approximately $1.5 billion in incentives. The pension fund's surplus has been a contentious issue, particularly after the government decided to transfer the “non-permitted surplus” into a general account in November 2024. This decision sparked a dispute between the government and public sector unions, with both sides accusing each other of misinformation, which led to confusion regarding the status of the surplus.

Barb Couperus, a spokesperson for the Treasury Board, confirmed that the surplus remains at $1.9 billion. However, the Treasury Board did not clarify whether the early retirement program would be funded by this surplus.

Eligibility for the early retirement program will be available to public servants who are over the age of 50 and joined the public service before 2013, or those over 55 who joined after. Additionally, they must have at least 10 years of employment and two years of pensionable service. A Department of Finance official stated, "Eligible public servants will be able to retire with an immediate pension based on years of service with no penalty for early retirement, provided they leave the federal public service in accordance with and subject to the parameters of the program."

The early retirement incentive program is expected to be in effect for five years, starting in the 2025-2026 fiscal year. The Department of Finance indicated that implementation could begin as early as January 15, 2026, pending the passage of the necessary legislation. A Department of Finance official noted, "It is the government’s intention to introduce these legislative amendments at the earliest opportunity."