What are Pension Adjustment Reversals? Are they helpful to me if I am contemplating retirement?
In order to explain a Pension Adjustment Reversal (PAR), it is first necessary to outline how your Pension Adjustment (PA) works. As of January 1, 2005, you can contribute to an RRSP up to 18% of your income from the previous year, to a maximum of $18,000. If you are a member of a registered pension plan, the amount you can contribute to an RRSP is reduced by a PA. The PA is CRA’s calculation, for RRSP purposes, of the deemed value of the pension benefit you earned from the CAAT Plan in one year. CRA calculates your PA and reports it to you on your T4 slip. The amount reduces your RRSP contribution room for the following year. You may also receive a Past Service Pension Adjustment if you purchase Purchasable Service (formerly Prior or Optional Service) for service after 1989. This amount also reduces your available RRSP contribution room. The PAR is meant to restore lost RRSP room for eligible Members of a pension plan who choose to terminate employment after January 1, 1997. If you ar
