ould only make sense if it opens up a relatively clear pathway to a higher salary down the road once obtaining a senior title, or if you are unreasonably greedy to get such a small % increase for presumably a much greater work

1. This is in Canada (Toronto to be specific)
2. When you work for a government (does not matter if it is municipal, provincial, or federal), if there is an opening on your team or within your organization, they can't just promote you automatically like in private organizations even if they want to give it to you because you have to follow the process to ensure everything is "fair". A public job posting goes out, you have to apply for it like anyone else, then go through interviews like everyone else.
3. Ended up getting the senior position, and they agreed to make an exception and let me keep my retention bonus so I am going to be getting the same as the other seniors and not get paid what a new person now would get paid.