PENSION ADJUDTMENTS (PA, PAR, PSPA)
The Pension Adjustment (PA), the pension adjustment reversal (PAR), and the past service pension adjustment (PSPA) have an impact on the RRSP deduction limit.
The PA reduces the RRSP deduction limit for the following year, but has no effect on the taxpayer’s income. It measures the value of all pension benefits accumulator by a taxpayer during the year with respect to an RPP or DPSP (but not a PRPP) and ensures that all deferred income plans to which an individual contributes are integrated.
For DPSP the pension adjustment equal is to the total amount of contribution paid for the benefit of the employ by the employer during the year.
For money purchase RPP (but not PRPP) the pension adjustment is equal to the total employer/employee contributions made during the calendar year. For defined benefit RPP, the pension adjustment is equal to nine times the individual’s benefit entitlement, less a $600 lump sum. In most cases, the individual’s benefit entitlement for the year must be determined by an actuary.
Pension Adjustment Reversal
The Pension Adjustment Reversal is added to the current years RRSP deduction limit. The amount of determined by the plan administrator.
Past Service Pension Adjustment
The past service pension Adjustment (PSPA) reduces the RRSP deduction limit. The amount of determined by the administrator of the plan
CONTRIBUTION LIMIT FOR THE YEAR
The following shown the yearly contribution limit for the application of various deferred income plans
PRPP DPSP RPSP
Limit Limit Limit
2016 26,010 13,005 25, 370
2017 indexed1 indexed1 26,010
2018 indexed1 indexed1 indexed1
1. The previous year’s limit is indexed to the average wage increase.