People make their way across Wellington Street in downtown Ottawa. As of 2025, Canada's federal public service employed nearly 358,000 people.Sean Kilpatrick/The Canadian Press
The cost of providing health and dental benefits to federal public servants has been growing by 11 per cent a year, according to a report by the Parliamentary Budget Officer.
The increases are expected to slow down as Ottawa trims the overall size of its bureaucracy.
The report from PBO Annette Ryan said the growth rate between the 2021 and 2025 fiscal years is outpacing comparable costs in some provincial governments, which grew between 3 and 7.7 per cent during the same period.
The main reasons for growth in federal spending on benefits were the increase in the size of the public service during that time, as well as a rising average cost per member, according to the PBO.
Spending on benefits represented about five per cent, or $3.5-billion, of the $71.4-billion in total personnel costs in the 2025 fiscal year. The PBO projects this cost will rise to $4.4-billion by 2030-31.
Federal departments and agencies to cut 12,000 full-time equivalent positions over three years
The November budget announced an expenditure review program that aims to reduce the size of the federal public service by 30,000 over three years. As of 2025, the federal public service employed nearly 358,000 people.
As a result of this plan, the PBO said the growth in benefit costs is expected to slow. Those savings are partly offset by workers moving into retirement, where they will continue to receive federal benefits.
Federal departments are currently offering eligible employees an early retirement incentive, which Ottawa is hoping will reduce the need for layoffs to reach its staff reduction targets.
Tuesday’s PBO report points to an analysis by the Office of the Chief Actuary, which assumed that 25 per cent of the roughly 63,000 public servants eligible for the incentive will take up the offer.
That would work out to about 15,750 workers, however, only 6,797 applications have been received as of May 26, according to Treasury Board figures.
The deadline for employees to apply for the early retirement incentive is July 24.
There are several benefit plans for public servants. The largest is the Public Service Health Care Plan, which has more than 800,000 members, including retirees. It accounts for about half of the total spending on benefits.
The PBO report said the average cost per member of that plan was $2,284 in the 2025 fiscal year, up from $1,637 in 2022.
The report does not provide detail as to the specific expenses that may be contributing to higher costs.