Improvements to compensation and benefits for the Canadian Armed Forces
On August 8, 2025, the Government of Canada announced improvements to compensation and benefits for Canadian Armed Forces (CAF) members, to be rolled out over the subsequent 12 months. Updates will be announced by CANFORGEN and appear on this webpage as they become available.
Military Factor adjustment
CAF members will see a significant, pensionable wage adjustment retroactive to April 1, 2025. This adjustment is a result of the modernization of the Military Factor: a percentage added to the base salaries of CAF members. The Military Factor is designed to appropriately compensate CAF members for the unique and demanding nature of military service. It accounts for the personal limitations and liabilities they accept, such as reduced personal freedoms under the Code of Service Discipline; frequent and often unpredictable separation from family due to operations, deployments, and training; and the financial uncertainty of geographic postings. It also reflects the expectation of 24/7 availability and the enduring physical and mental rigours of service to keep Canadians safe.
The Military Factor adjustment will represent the following increase to the gross pay of CAF members, for the Reg F and Res F, including the Canadian Rangers and Cadet Organizations Administration and Training Service:
13% – Regular and Reserve Force members in the ranks of Sailor/Private/Aviator, Pay Increment 2 to Commander/Lieutenant-Colonel, including general service officers, pilots, and medical, dental and legal officers.
8% – Regular and Reserve Force general service officers in the ranks of Captain(Navy)/Colonel and above.
Additionally, the entry-level salary for members in the rank of Sailor/Private/Aviator at Pay Increment 1 will be adjusted as follows:
20% – for Regular Force and 13% for Reserve Force members.
For example, the starting salary for a Private, Pay Increment 1 (Regular Force) will increase from $3,614 a month ($43,368 yearly) to $4,337 a month ($52,044 yearly).
Update: Members are expected to start seeing these new rates of pay and receive their lump sum payments for the retroactive increases on their mid-November pay.
Useful links:
Questions and answers
Q1. What are the military factors and how were they adjusted?
CAF members have their base pay benchmarked to the civilian Public Service, which ensures that CAF members benefit from the results of collective bargaining, despite not being able to unionize.
The military factor is a percentage added to the base pay of CAF members to account for certain challenges and stressors and the demands of military service.
The military factors are applied to officers and non-commissioned members and have increased between 13% and 15% percent, depending on the group. Learn more: Understanding military pay
Q2. When will members see the wage adjustment and retroactive pay in their bank accounts?
It is expected that members will see their wage adjustment and retroactive pay on their mid-November pay.
Q3. Why aren’t Officer Cadets and Naval Cadets receiving a 20% increase similar to entry-level Reg F Pte/Avr/S3?
The rates of pay for Officer Cadets and Naval Cadets (OCdt/NCdt) are set by Treasury Board using a different method from other ranks. They calculate how much Cadets would normally pay for food and housing (about 35% of their pay) and add more for other living costs. Also taken into consideration is the fact that OCdt/NCdt in the Regular Officer Training Plan program have tuition, books, and other school-related costs covered, and that their income and time is pensionable, which is of great advantage when an officer retires.
Q4. Why are new Res F members not receiving the 20% increase along with their Reg F counterparts?
In recent years, the CAF has made targeted adjustments to Res F entry-level pay to ensure it remains competitive and aligned with federal compensation standards. These adjustments were informed, in part, by federal minimum wage guidelines.
As the Res F entry-level pay had already been adjusted in recent years — in some cases at a faster rate than the Reg F — the current increase for Res F Privates is lower, at 13%. This is not a reduction, but rather a continuation of efforts to maintain fair and balanced compensation across both components.
Q5. How will the retroactive adjustments be applied to benefits for released members?
CAF pay and benefits (if release date is on or after 1 April 2025)
Pay, allowances and other benefits (such as leave cashouts) linked to CAF salary will be readjusted automatically, and funds transferred directly to the bank account on file.
Canadian Forces Severance Pay will be readjusted separately in the months following the pay increase.
Tax Slips (T4)
T4s will be issued automatically from the province of Ontario when released CAF members are entitled to a CAF retroactive pay increase. Regardless of where released CAF members may have served previously, the Release Benefits Administration (RBA) pay office located in Ontario is considered their final employment location for tax purposes.
Veterans Affairs Canada benefits
Once changes have been made to the Pension Benefits (Canadian Forces Superannuation) and the Canadian Armed Forces Long Term Disability (CAF LTD) benefits, Veterans Affairs Canada (VAC) will recalculate a former member’s Income Replacement Benefit (IRB).
A letter will be sent to the former member if there are any changes to their Financial Benefits. Please refrain from reaching out to Release Benefits Administration (RBA) for a status update as this organization cannot provide any updates on VAC processes.
Pension Benefits – Canadian Forces Superannuation Act
If you were released from the CAF on or after April 1, 2025, your pension may increase due to retroactive pay raises. These pay adjustments affect how your pension is calculated.
Pension recalculations will only begin once the updated salary levels are fully processed in the CAF pay system. It may take over a year for these retroactive pension changes to be reflected in your payments. Patience is appreciated as these updates are implemented.
CAF Long-Term Disability
Long-term disability benefits are often based on a percentage of the member's salary. As retroactive pay increases result in higher salary levels being used to calculate disability benefits, this will lead to increased disability payments for affected individuals.
CAF LTD relies on updated information on an affected member’s pension benefits before proceeding with LTD readjustments.
As the CAF LTD benefits are managed separately, additional work needs to be done to institute these adjustments. The timeline for the retroactive adjustment to the CAF LTD cannot be determined at this time.
To verify your entitlements under CAF LTD, you may contact SISIP Financial by telephone at 1-800-267-6681 during regular business hours (8:00 a.m. to 4:30 p.m. Eastern Time).
Q6. If a member was deployed during the time covered by the retroactive wage adjustment, how will tax exemption be applied?
As per Canada Revenue Agency direction, after December 2023, in the case of a member who receives a retroactive pay adjustment for a period when they were subject to tax exemption, only the amount earned while deployed will be tax-exempt.
Example #1. A member was deployed on OP REASSURANCE from January 15, 2025, to June 15, 2025. The value of the retroactive pay earned between April 1, 2025, and June 15, 2025, will be subject to tax exemption.
Example #2. A member is deployed from July 1, 2025, to December 1, 2025, and the retroactive pay is posted on their pay account on November 15, 2025. Only the portion of the retroactive pay earned from July 1, 2025, to November 15, 2025, will be tax-exempted. All other earnings, from November 15, 2025, to December 1, 2025, will be tax-exempted, inclusive of the new rates of pay.
In all cases, a member may only be tax-exempt up to a maximum monthly amount equivalent to the highest level of pay earned by a Lieutenant-Colonel (General Service Officers) in the CAF.
Canadian Forces Housing Differential amendments
Canadian Forces Housing Differential (CFHD) rates are based on a comparator value representing the difference between rental costs (for a two-bedroom apartment) at the place of duty to which a CAF member is posted and a percentage of the member’s monthly rate of pay.
The CFHD employs an equitable, rather than equal, approach, in that it is focused on lower-salaried members in more expensive locations. The policy aims to assist members posted to locations where their salaries cannot cover their housing costs, so that no CAF member feels unreasonably financially burdened due to the affordability of housing at their work location.
Update: The salary bands for the CFHD pay levels have been adjusted effective August 6, 2025 (the Treasury Board approval date). With this update, the vast majority of members should not notice any change in the amount of CFHD paid.
It is important to note that on July 1, 2026, CFHD rates will be affected by the pay increase. This is when the CFHD rates will be adjusted as part of the normal, annual process ensuring that the program remains responsive to economic conditions and adheres to the approved methodology.
The calculation used for the rates on July 1, 2026, will use the new pay rates, which will result in a drop in the CFHD paid to members. These new CFHD rates will be communicated as part of the cyclical update in the spring of 2026.
Members are encouraged to refamiliarize themselves with the CFHD policy and methodology laid out in the links below.
Useful links:
Questions and answers
Q1. How is CFHD affected when there is a retroactive pay increase?
As a result of the pay adjustment, the CFHD pay levels at CBI 205.453(7) were updated effective August 6, 2025. This is to ensure that following the pay adjustment, the majority of members will not be removed from their pay level, which would cause a reduction or disentitlement. There will be no retroactive changes to CFHD before August 6, 2025, Treasury Board approval date. In exceptionally rare cases, members may see a reduction in CFHD.
As part of the annual review process, CFHD rates will be adjusted on July 1, 2026, to reflect the changes in members’ salaries and market conditions. These adjustments are a normal part of the CFHD rate calculation and ensure the program remains responsive to evolving economic and financial conditions.
On July 1, 2026, members should expect a decrease in their CFHD rate as a result of the increase to their gross monthly salary.
Separation Expense enhancements
When a CAF Reg F member is posted to a new location and cannot be accompanied by their family, they may proceed unaccompanied and be eligible to receive Separation Expense (SE) to help offset the additional costs associated with living apart and maintaining a second accommodation.
Update: Effective November 1, 2025, members in receipt of SE may now be entitled to a food allowance of approximately $19.51/day if they are not being provided with free rations at a CAF dining hall. Additionally, all members in receipt of SE will receive the new transportation component of $350/month and the new miscellaneous expenses component of $200/month.
Orderly rooms will be provided an updated claim form and standard operating procedure (SOP) in due course.
Useful links:
Questions and answers
Q1. What is Separation Expense?
Separation Expense (SE) provides compensation to offset the costs of maintaining a temporary accommodation at the new place of duty when a member proceeds on a posting unaccompanied by their dependents. This includes members who are on an approved “Imposed Restriction” status. The benefit is available to Regular Force members and to Reserve Force members who are moved for a period of Class “C” Reserve service.
Q2. What are the changes?
As part of recent updates, SE now includes three new components to help offset the cost of living for members who are entitled to receive it:
- A food component, either:
- free rations at the local CAF dining hall for members living in quarters, or
- in any other case, a daily food amount equal to the national average daily basic food cost for CAF dining halls;
- A transportation component of $350 per month; and
- A miscellaneous living expenses component of $200 per month.
Q3. When will the change take place?
Members currently receiving SE will automatically become entitled to the new components (food, transportation, and miscellaneous living expenses) starting November 1, 2025. The benefit will continue to be administered through a claims-based system.
Updates to procedures and required supporting documentation will be communicated accordingly. Members will not be required to provide any receipts for the new components of the benefit.