Cost of federal public service benefits to hit $4.4 billion a year by 2030-31: budget office

A federal government office building in Ottawa is pictured in this Dec. 4, 2025, image. (CTV News Ottawa)

The price tag for the public service insurance plan for federal public servants is expected to increase by approximately $900 million a year in the next five years, as insurance premiums rise and more members enroll in the benefit plan.

A report by the Parliamentary Budget Officer shows the cost for the public service insurance plan will grow from $3.5 billion during the 2024-25 fiscal year to $4.4 billion in 2030-31.

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The 3.5 billion cost for the insurance plan for public servants accounted for five per cent of the $71.4 billion in total personnel expenditures by the Treasury Board of Canada Secretariat during the 2024-25 fiscal year.

The report was prepared in response to a motion from the Standing Senate National Finance Committee in December 2025 to examine the cost trajectory of the public service insurance plan.

It looked at public service plans and insurance plans under the Treasury Board Secretariat, including the Public Service Health Care Plan (PSHCP), which includes retirees, the Public Service Dental Care Plan (PSDCP), Pensioners’ Dental Care Plan, the Disability Insurance Plan, and the Royal Canadian Mounted Police life and disability insurance plan.

‘Driven by both price and utilization’

According to the Parliamentary Budget Officer, the annual growth rate of the employer’s cost for the federal public service pension plan was 11 per cent between 2021-2022 and 2024-25. The costs for health, dental and disability insurance plans increased three per cent in Ontario, 6.2 per cent in Manitoba, and seven per cent in both Saskatchewan and Manitoba over the same period.

“Federal growth was primarily driven by expenditures per member for health and dental plans, driven by both price and utilization,” the report said.

The average cost per member under the Public Service Health Care Plan increased from $1,486 per member in 2020-21 to $2,284 in 2024-25, while dental care coverage costs jumped from $415 per member in 2020-21 to $477 in 2024-25.

Increase in pensioner beneficiaries

The Parliamentary Budget Office says expenditures for the federal public service plan will reach $4.4 billion by 2031.

“Overall growth in members is expected to be modest relative to historical trends, reflecting the impact of workforce reductions, which are expected to slow or reduce active employee participation in the PSHCP and PSDCP,” the report said.

“However, these declines are partially offset by an increase in pensioner beneficiaries, as some departing employees transition into retirement, for example through the Early Retirement Incentive (ERI), and retain access to health and dental benefits.”

The office notes growth in both prices and the plan’s utilization will drive expenditure growth over the next five years.

There were 803,000 members in the Public Service Health Care Plan in 2024,25, up from 732,000 members in 2020-21. The number of members in the Public Service Dental Care Plan increased 3.5 per cent over the same period.

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