The pension adjustment calculation does not discriminate between amounts that are vested and not vested. When an employee leaves a company, typically after a fairly short term of employment, none of the employer pension contributions may be vested. This means that the departing employee can only take away the employee pension contributions. As a result, the previous years’ pension adjustments were overstated because they included the employer contributions.
The Pension Adjustment Reversal (PAR) logically, then, reverses this overstatement and creates instead some extra RRSP contribution room — after the fact.
The departed employee will be informed of this amount by the former employer.
This reversal only takes effect from 1998 onwards.