Pension Adjustment

• The pension adjustment, which reduces your RRSP contribution room, is the deemed value of your and your employer's contributions to your work pension for the prior year.
• Thus, the Pension Adjustment (PA) obviously is "nil" for self-employed people and those who don't have a pension plan at work.
• For those whose work plan is a "money purchase plan", the PA simply is the sum of the amounts of money contributed to the plan on your behalf by you and your employer.
• For those whose work plan is a "defined benefit plan", the calculation of the PA is quite complicated and beyond the scope of this article.
• That calculation does guarantee, however, a minimum annual contribution room of $600.
• Your employer will report your PA annually, either on your T4 slip or on a separate T4A slip.