Mthobisi Nozulela|Published
The government expects to save about R4.4 billion a year by encouraging public servants to take early retirement or accept voluntary exit packages, as it seeks to cut the public sector wage bill and make room to hire younger workers.
The programme forms part of National Treasury’s plan to contain government spending while improving the efficiency of the public service.
In his Medium-Term Budget Policy Statement presented to Parliament on Wednesday, Finance Minister Enoch Godongwana said the savings would help address pressure on employee compensation costs and create room to fund additional posts in critical frontline services, particularly education and healthcare.
“After accounting for the initial exit costs, the programme is projected to realise net savings of R4.3 billion in 2027/28, R4.4 billion in 2028/29 and R4.6 billion in 2029/30,” Treasury said.
The department estimates that the average annual saving of about R4.4 billion could provide the funding capacity for approximately 7,101 additional posts to support frontline services or address spending pressures without exceeding existing compensation ceilings.
How the programme works
The Early Retirement Programme (ERP) and Voluntary Exit Programme (VEP) were approved by Cabinet in April 2024 and formalised through a directive issued by the Department of Public Service and Administration in October 2025.
The programmes offer eligible public servants financial incentives to leave the public service before or after reaching the normal retirement age, with the aim of reducing long-term employment costs.
Under the arrangement, employees aged 55 to 59 can apply for early retirement without the usual pension-benefit penalties, while those aged 60 to 63 can apply for voluntary exit with an additional financial incentive.
The incentive is calculated according to an employee’s basic salary and years of pensionable service.
For employees aged 55 to 59, it amounts to two weeks’ basic salary for each year of pensionable service during the first 20 years, and one week for each completed year thereafter.
For employees aged 60 to 63, the two-week rate applies to the first 10 years of pensionable service, followed by one week for each completed year thereafter.
Thousands of applications processed
According to figures contained in the Medium-Term Budget Policy Statement, the first phase resulted in 8,245 public servants leaving the workforce, at a cost of R3.87 billion in state-funded incentives.
A further 19,347 applications were processed in the second phase. These figures should be distinguished from the number of employees who have ultimately exited, as processed applications do not necessarily mean that all applicants have left the public service.
Treasury says the projected savings could help fund additional personnel in critical services, including education, healthcare, correctional services and policing.
Unions raise concerns over staffing
The programme has drawn criticism from public sector unions, which warn that the departure of experienced employees could worsen existing staff shortages if vacancies are not filled.
The South African Democratic Teachers’ Union (SADTU) has raised concerns about insufficient permanent appointments in schools and delays in appointing substitute teachers when educators are absent for extended periods.
"SADTU is particularly concerned about the implications of the government’s expenditure containment approach for public service," the union said
"The proposed early retirement and voluntary exit measures, which the Minister says will generate average annual savings of R4.4 billion, raise serious questions about the government’s understanding of capacity, service delivery, and the long-term sustainability of the public service."
The union added that "the claim that these measures will rejuvenate the public service must be tested against the realities confronting schools."
"Across the education sector, educator establishments remain constrained, permanent appointments are insufficient, and substitute teachers are often not appointed when educators are absent for extended periods."
"The consequence is increased workloads for educators who remain in the system, compromised teaching and learning, and the loss of experienced professionals whose institutional knowledge and expertise should be transferred to younger educators."
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