What is a Pension Adjustment Reversal (PAR)?
When a member of a defined contribution pension plan, such as the CSS Pension Plan, terminates his/her membership in the Plan prior to obtaining “vesting” (i.e., unconditional ownership) of the employer contributions made on his/her behalf and the employee withdraws his/her own contributions, the employee forfeits such employer contributions. These forfeited contributions are then returned to the employer as a credit towards future employer contributions. As these “forfeited” contributions form part of the PA (Pension Adjustment) reported to the CCRA on the employee T4 slip issued by the employer, they effectively reduce the amount that the employee can contribute to an RRSP in the future. In the spring 1996 Federal Budget, the Minister of Finance indicated his intention to introduce a procedure whereby such “lost RRSP room” would be re-instated (i.e., the Pension Adjustment Reversal). In this regard, draft changes to the Income Tax Act in 1998 require the administrator of the pension
