Proposed Early Retirement Incentive
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Budget 2025 announces the Government’s intent to amend the Public Service Superannuation Act and the Income Tax Regulations to offer a voluntary Early Retirement Incentive program through the federal public service pension plan.
This incentive would help manage workforce reductions to the greatest extent possible through attrition and voluntary departures.
The program is not yet available. Implementation would proceed by January 15, 2026, or when legislation comes into force (whichever is later). The government intends to conclude the process within 300 days (approximately 10 months) of implementation.
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How this incentive would work
Eligible employees would be able to apply to retire with an immediate pension based on years of service with no reduction for early retirement.
Where an application is approved, the annual pension amount would be calculated using the total years of pensionable service up to the early retirement date. Pensionable service refers to the period during which the employee contributed to the public service pension plan.
Who would be eligible for this incentive
Employees would need to meet the following eligibility criteria on their last day of employment:
Group 1: Members who joined the public service pension plan on or before December 31, 2012 and who:
- Are at least 50 years old
- Have at least 2 years of pensionable service
- Have at least 10 years of employment in the public service
Group 2: Members who joined the public service pension plan on or after January 1, 2013 and who:
- Are at least 55 years old
- Have at least 2 years of pensionable service
- Have at least 10 years of employment in the public service
Meeting the above eligibility criteria does not guarantee access to the program. Employees must apply and secure endorsement from their deputy head based on parameters established by the Treasury Board. These parameters are currently being developed and will be shared in due course.
The application window would be within 120 days (approximately 4 months) of January 15, 2026, or of the legislation coming into force (whichever is later). Approved employees would have to retire within 300 days (approximately 10 months) of January 15, 2026, or of the legislation coming into force (whichever is later).
Years of employment refers to your total time working in the public service. It does not include service bought back from outside the public service. Years of pensionable service is the time you have contributed to the public service pension plan, which includes eligible service bought back.
How a pension reduction for early retirement works
Normally, when an employee retires before meeting the age and service requirements for an immediate annuity, their pension is permanently reduced. This is called an annual allowance. The reduction is 5% for each year of early retirement.
For example, if they retire 5 years early, their pension will be reduced by 25%. However, under the Early Retirement Incentive program, this reduction would be waived for eligible employees.
Next steps
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If the legislative changes required to implement this initiative are passed, all the necessary information would be communicated to employees, including the application process and steps they would need to take if they are interested in a voluntary Early Retirement Incentive.
In the meantime, two pension tools are available to employees who wish to obtain a general estimate of their pension based on different scenarios.
Pension Portal
Employees can sign in to the Pension Portal to create personalized pension estimates.
Basic pension calculator
Employees who can’t access the Pension Portal can use the Basic pension calculator to get a general idea of their pension amount.
If employees experience difficulties using the pension calculation tools at their disposal, or have additional questions, they can contact the Government of Canada Pension Centre. Please note that the Pension Centre is experiencing increased call volume and wait times may be longer than usual.
For more information
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Pension reduction and pension options
For additional information on how the pension reduction usually applies for early retirement, and on the existing pension options available, visit:
Workforce Adjustment
The Early Retirement Incentive program is not related to Work Force Adjustment, if you have questions about Work Force Adjustment, please speak with your manager or your departmental Human Resources. The Pension Centre does not have information about Work Force Adjustment. For more information about Workforce adjustment.