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The Case for Ending Early Retirement in the Public Sector

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June 2013
Marvin Cruz, Research Analyst

Eight out of ten public sector workers (federal, provincial and municipal) who retired between 2007 and 2011 did so before the age of 65. That compares with six out of ten private sector employees, and only five out of ten self-employed individuals. The federal government recently made some positive changes to bring public sector pensions in line with those in the private sector, but there’s still a lot of work that needs to be done.

Federal public employees who retire early are eligible to collect a “bridge benefit” (a temporary income top-up that ends when a retired public servant reaches the age of 65) which can be as much as $105,000 per retiree, according to a new CFIB study, The Case for Ending Early Retirement in the Public Sector.

At the federal level, over 55,000 pensioners received an average annual bridge benefit of roughly $7,000 in 2010-11. The earliest retirement age for federal public servants to receive a reduced pension is 50. A federal government worker who retires at that age is eligible to collect $105,000 in bridge benefit payments that are not available to private sector employees.

With the exceptions of Alberta, Saskatchewan and Manitoba, similarly overly-generous bridge benefit provisions can be found in pension plans for provincial public servants. The bridge benefit is especially expensive in the Maritime Provinces at around $8,000 per year.

In 2011, the federal government was on the hook for $2 billion in pension benefits to public servants who retired before the age of 65. That’s 44 per cent of the $4.6 billion in total pension benefits payable to retired federal public servants. 

The Case for Ending Early Retirement in the Public Sector is the fourth in a series of CFIB reports that examine the problem of unfair and unsustainable public sector pensions. Previous reports:Canada’s Hidden Unfunded Public Sector Pension Liabilities and Calling in Sick: Comparing Days Away from Work in the Public and Private Sector. The fifth report in the series is Canada’s Two-tier Retirement.