Civil servants' retirement allowances axed

The Alward government is cancelling a retirement allowance for civil servants, a move that will save roughly $47 million.

Finance Minister Blaine Higgs also looks to save $20M on cutting sick leave

The Alward government is cancelling a special retirement allowance that gives civil servants a week's pay for every year they have worked, a move that will save roughly $47 million.

Jane Garbutt, the deputy minister of finance, issued a memorandum to civil servants on Tuesday evening outlining the provincial government’s decision to scrap the program.

Retiring employees currently receive one week's pay for every year they have worked, with a maximum of 25 years.

The provincial government will halt that practice for managers and non-unionized employees on April 1.

New employees will not receive the retirement allowance and those civil servants currently working will no longer accumulate any more weeks towards the total. This move will essentially freeze the payouts for current civil servants in place.

According to an internal memo, civil servants will get an option to either collect that money in April or receive the money when they retire.

The decision likely means a short-term expense for the provincial government if a lot of civil servants opt to collect their money this year. But the change is intended to offer a long-term savings.

Finance Minister Blaine Higgs made it clear during last year's budget consultations that he was targeting the retirement allowance.

Civil servants, however, told the finance minister they did not want him to cut the program.

"For crying out loud don't take my retirement allowance away from me. I've been working too hard and too long for that one," one civil servant told Higgs during a public meeting.

The allowances were created when civil servants earned less than most private sector employees.

The provincial government is also adjusting how civil servants get pay increases.

The internal memo says all future raises for non-union civil servants will be indexed to economic growth.

As well, the finance department is planning a review of employee attendance.

"The province will work with those employees who experience difficulties with regular attendance," the memo said.

Garbutt’s memo said the provincial government wants to achieve a $20 million savings based on a 20 per cent reduction in sick leave usage across the civil service by March 31, 2015.