Old Age Security Losing Ground to Wages, Report Finds

A C.D. Howe Institute study says OAS benefits are shrinking as a share of retirees' income while wages outpace them.

Updated on Nov. 3, 2026 in Retirement Planning

Isometric editorial illustration of two flat-colored columns on a cream ground, the left one full and the right one visibly drained, illustrating a shrinking retirement benefit relative to wages. — A C.D. Howe Institute report finds Old Age Security benefits are shrinking as a share of retirees' income as wages outpace them, and proposes merging OAS with the Guaranteed Income Supplement. AI Illustration. Upload story photo >

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A C.D. Howe Institute report finds Old Age Security benefits are shrinking as a share of retirees' income. Researchers propose combining OAS and the Guaranteed Income Supplement into a benefit targeted at lower-income seniors.

Why it matters

OAS is adjusted for cost-of-living increases but not linked to wages, which generally rise faster than inflation, so its share of preretirement income gradually declines. Canadians relying on public and workplace pensions for retirement income in Canada face a shrinking replacement rate.

The study draws on Statistics Canada tax data from 2002 to 2022 and projects OAS replacement of preretirement earnings could fall more than 22 per cent over 20 years under a one-point wage-inflation gap. Whether the proposed combined OAS-GIS benefit would be implemented remains unaddressed.

The players

C.D. Howe Institute

A Toronto-based independent, nonpartisan public policy think tank that publishes research on economic and fiscal issues in Canada.

The details

Researchers found that fewer than 25 per cent of private-sector workers were covered by a registered pension plan in 2023, down from about 35 per cent in 1980. Seniors' median net worth has more than doubled since 1999, and dividends and RRSP withdrawals have grown as income sources.

2002: Public and private pensions replaced 58 per cent of preretirement income.
2002 to 2022: Period of Statistics Canada tax data analyzed in the study.
2022: Public and private pensions replaced about 48 per cent of preretirement income.
2023: Fewer than 25 per cent of private-sector workers had registered pension coverage.

Big Picture

The decline in pension replacement documented in Statistics Canada tax data from 2002 to 2022 is now being traced to OAS's lack of wage indexation. The study places Canada's public retirement framework on a path where the Canada Pension Plan and Quebec Pension Plan must carry a larger share of retirees' living standards.

Canadians nearing retirement may want to review how much of their income will come from OAS, the Canada Pension Plan or Quebec Pension Plan, and any workplace pension. Because OAS is not indexed to wages, savers should consider how RRSP withdrawals and investment income could fill the gap.

The takeaway

Retirement income increasingly depends on the Canada Pension Plan, Quebec Pension Plan, and personal savings as OAS's share of income erodes. Reviewing your expected retirement sources now can help close any gap before it widens.