Pension Adjustments (PA)
A pension adjustment or PA is an amount that reduces the RRSP deduction limit of persons who are in a company-sponsored registered pension plan. This is an attempt to equalize the various tax deferred savings programs in Canada and ensure that persons who participate in a company pension plan do not have the same level of RRSP contributions as those who do not.
Thus, persons who are not in a pension plan do not have a pension adjustment. Those who actively participate in a registered pension plan have a pension adjustment reported for each year of participation on their T4 slip (Statement of Remuneration Paid). The pension adjustment reported in a calendar year reduces allowable contributions to an RRSP for the next calendar year.
Our clients who are “pensioners” (receiving their pension income directly out of their IPP funds) are not required to report a pension adjustment.
Pension Adjustments are reported in Box 52 of your T4. McFarlane Amerlee calculates and provides the PA early in the new year. If you require the information prior to hearing from us, please contact our office.