Public servant ‘scared’ to retire due to problems with Phoenix pay system

OTTAWA — A federal public servant says she’s “scared” to take up the government’s early retirement offer after being told that she owes the government about $10,500 because of a mistake in her pay file.

Jennifer MacDougall got the letter from the pay centre in February but said the situation itself stems back to between 2014 and 2018.

MacDougall was working in a role that was reclassified, meaning she wasn’t getting paid as much as she should have been. In 2019, she eventually received retroactive pay but is now being told that information was incorrectly inputted into the Phoenix system and that she owes the government money.

“The whole thing is just so crazy,” said MacDougall, who is fighting the decision. She said her case is still in processing but that under the Crown Liability and Proceedings Act, the federal government has a six-year window to recover a debt.

“It’s giving me anxiety, it’s giving my husband anxiety and it’s affecting my ability to confidently retire.”

The most recent federal budget outlined an early retirement incentive as part of the government’s ongoing effort to cut the number of public servants. The program, which is not yet available, is designed to allow federal workers to retire early without a penalty to their pension.

Alex Benay, the associate deputy minister of Public Services and Procurement Canada, said at a press conference earlier this month that public servants looking to take up the government’s early retirement program are right to be worried about potential issues with Phoenix.

“I’d say they’re right to be concerned,” Benay said. “I mean, the track record being what it is.”

However, Benay also said the government has a plan to deal with an influx in cases involving severance pay.

“We have a specialized service that we’ve created within the pay centre to deal specifically with these cases,” Benay said, adding that the service has not yet been deployed. “The service is ready, people are trained.”

Benay said he has been laid off in the past and that “the last thing you want is to have to worry about your pay situation.”

Benay said the department is also looking at how automation can be used.

“I feel pretty comfortable we’ll be able to manage the volume at this point,” he said.

The Phoenix system has been mired in problems since it was rolled out in 2016, costing taxpayers about $5 billion, while paying some federal public servants incorrectly — some being overpaid and others not paid at all.

Ottawa announced last year it had awarded a 10-year, $350.6 million contract to the system’s replacement Dayforce and implementation is set to begin in 2027.

The federal government said last year it would expand its use of artificial intelligence to clear a backlog of Phoenix pay system transactions as it transitions to a new platform.

Despite its efforts, the Government of Canada website says the backlog of transactions stood at 216,000 as of Feb. 25 and that 45 per cent of those cases are more than a year old.

MacDougall said she’s concerned that if she chooses to retire, the government will come hunting for more money later down the road.

“For the next six years after my last pay, I’ll always be worried that they’re going to come looking for something,” she said. “I feel like I can now never trust any information I get from them.”

This report by The Canadian Press was first published March 22, 2026

Catherine Morrison, The Canadian Press