Early retirees cost federal pension plan $2 billion annually: Study

The benefit is a temporary income top-up that ends when a retired public servant reaches the age of 65.

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.

“The way the rules are structured, public servants would be foolish not to retire early,” said Marvin Cruz, a CFIB research analyst and author of the study. “The bridge benefit is an outrageous perk and a perverse incentive that should be eliminated.”

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, according to the study. That’s 44% of the $4.6 billion in total annual pension benefits payable to retired federal public servants.

With the exceptions of Alberta, Saskatchewan and Manitoba, similar bridge benefit provisions can be found in pension plans for provincial public servants. The bridge benefit is especially expensive in the Maritime provinces at about $8,000 per year.

Eight out of 10 public sector workers (whether at the federal, provincial or municipal level) who retired between 2007 and 2011 did so before the age of 65.

Read more:

• CFIB says C/QPP hike will hurt Canadian economy
• CFIB welcomes PRPP