Budget 2025 and the Public Service
The Government of Canada has announced measures in Budget 2025 that affect the public service. These measures will support the government’s priority of spending less on government operations and investing more to strengthen the country.
Comprehensive Expenditure Review
Budget 2025 outlines $13 billion in annual savings by 2028-29 across more than 100 federal organizations as a result of the Comprehensive Expenditure Review. These savings are being reviewed to assess impacts for each organization.
Workforce adjustment
The Budget projects that the public service will return to a more sustainable level of 330,000 employees across government by 2028-29. This includes a planned reduction of 1,000 executive positions over the next two years to ensure adjustments also include leadership roles.
Where there are impacts on work units or positions in the organization, the goal will be to minimize impacts on employees. All available tools will be used, including attrition and existing workforce adjustment provisions that have been co-developed or negotiated with employee representatives and bargaining agents. Career transition measures are also available for executives.
Early retirement incentive program
To manage reductions to the greatest extent possible through attrition and voluntary departures, Budget 2025 proposes a voluntary early retirement incentive program. Eligible employees would be able to retire with an immediate pension based on years of service, with no reduction for early retirement.
Public Sector Pension Plans contribution rates
Budget 2025 announces the government's intention to consult with key stakeholders about the coordination of the public sector pension plans with CPP and QPP enhancements. This change could reduce public sector pension contributions for both employees and the Government and would have no impact on CPP/QPP contributions. The combined pension benefit from both the public sector pension plans and the CPP/QPP would return to a level of 2% for each year of service.
The same adjustment was already made to members of the Parliamentary Pension Plan starting January 1, 2025.
Expansion of the Operational Service Early Retirement Program
Budget 2025 reaffirmed the government’s commitment to expand the operational service early retirement program to frontline employees of additional occupational groups. This program allows certain eligible pension plan members to retire earlier with an immediate unreduced pension after completing 25 years of actual operational service.
Changes to the eligibility period for the Pensioners’ Dental Services Plan
Budget 2025 proposes to amend the eligibility period for the Pensioners’ Dental Services Plan (PDSP) from the current two-year pensionable service requirement to six years of pensionable service. This proposed change would align the PDSP eligibility period with that of the Public Service Health Care Plan for retired plan members.