Each year, the Canada Pension Plan (CPP) and Old Age Security (OAS) are adjusted to reflect inflation and changes in the cost of living. This process, known as the Cost-of-Living Adjustment (COLA), ensures that retirement income keeps pace with rising prices.
In 2026, seniors across Canada will see another increase in their CPP and OAS payments. With inflation still impacting groceries, housing, and utilities, this adjustment is a key part of protecting the financial security of retirees.
This article explains how COLA works, the expected increase for 2026, payment dates, and what this means for Canadian seniors relying on government pensions.
What Is the Cost-of-Living Adjustment (COLA)?
COLA is an annual increase applied to benefits like CPP and OAS. Its purpose is simple: to protect the purchasing power of retirees by ensuring that benefits rise along with inflation.
- For CPP, the adjustment is based on the Consumer Price Index (CPI), which measures average price changes in goods and services.
- For OAS, the same CPI data is used, with adjustments applied quarterly.
Without COLA, seniors would see the real value of their pensions shrink over time as the cost of daily necessities increases.
How COLA Is Calculated in Canada
The government looks at the average CPI over a 12-month period (October of the previous year to September of the current year). The difference between that average and the previous year’s average determines the adjustment.
For example:
- If inflation averages 3%, then CPP and OAS payments will rise by 3% the following January.
- If inflation averages 1%, then the adjustment will be 1%.
This ensures a direct link between the economy’s price levels and seniors’ benefits.
What to Expect for CPP in 2026
The exact percentage increase for CPP will be announced later in 2025, once inflation data is finalized. However, based on current trends:
- If inflation remains in the 2.5%–3.5% range, seniors could see a 3% boost in their CPP payments starting January 2026.
That means:
- A senior receiving $1,000 per month in CPP could see an increase of about $30 per month.
- Someone receiving the maximum CPP (around $1,365/month in 2025) could see an increase of about $41 per month.
These increases, while modest, can help offset higher grocery bills, transportation costs, and utilities.
What to Expect for OAS in 2026
The Old Age Security (OAS) pension works a little differently. It is reviewed four times a year (January, April, July, and October). Each adjustment reflects CPI data for the previous quarter.
For 2026, seniors can expect:
- A January 2026 increase, likely in the 2.5%–3.0% range.
- Further adjustments throughout the year, depending on inflation.
The maximum monthly OAS in 2025 is:
- $713.34 for seniors aged 65–74
- $784.67 for seniors aged 75+
With a 3% adjustment in January 2026:
- Seniors 65–74 could see OAS rise to around $734 per month.
- Seniors 75+ could see OAS rise to around $808 per month.
When Will CPP and OAS COLA Increases Take Effect?
- CPP increases are applied each January and remain fixed for the year.
- OAS increases are applied quarterly in January, April, July, and October.
For 2026, the first increases will appear in:
- January 2026 (CPP and OAS)
- Followed by April, July, and October 2026 (OAS only)
Why the 2026 Adjustment Matters
With inflation continuing to impact Canadian households, the COLA increase is more important than ever. For many seniors:
- Their pensions are their primary source of income.
- Even small increases can make the difference in affording rising costs.
- COLA ensures they don’t fall behind when prices rise.
It’s also worth noting that COLA increases are automatic—seniors don’t need to apply for them.
Example: A Retired Couple in 2026
- John receives $1,200/month in CPP.
- Mary receives $700/month in CPP and $713/month in OAS.
- Together, they have $2,613/month in government pensions in 2025.
With a 3% COLA in 2026:
- John’s CPP rises to $1,236.
- Mary’s CPP rises to $721.
- Mary’s OAS rises to $734.
Their combined monthly income rises to $2,691—an extra $78 per month or nearly $940 per year.
Frequently Asked Questions
Do seniors need to apply for the COLA increase?
No. CPP and OAS increases are automatic and applied to all recipients.
Will the COLA increase affect GIS (Guaranteed Income Supplement)?
Yes. GIS is also indexed to inflation, so it rises when OAS does.
Can the COLA be zero?
Yes. If inflation is extremely low (0% or negative), the COLA may be zero. However, benefits will never decrease.
How often is CPP adjusted?
CPP is adjusted once per year in January, based on annual CPI data.
How often is OAS adjusted?
OAS is adjusted quarterly, four times per year, based on recent CPI data.
The 2026 Cost-of-Living Adjustment (COLA) will bring welcome increases to both CPP and OAS benefits. While the expected 3% boost may not erase all the pressure of inflation, it ensures seniors’ pensions continue to provide meaningful support.
By January 2026, millions of Canadian retirees will notice a higher deposit in their accounts, giving them more stability as living costs remain elevated.