Pension adjustment (PA)
A pension adjustment (PA) is the value of the benefits a person earned in a year under their employer’s registered pension plans and deferred profit sharing plans, and possibly some unregistered arrangements. The CRA says it generally reduces the person’s RRSP deduction limit for the following year.
Owner-managers and key staff who belong to an employer plan meet the pension adjustment on their T4 slip. It matters to a seller or employee because it affects registered retirement savings room, and a buyer who takes over a plan can check how it is reported. See what happens to the pension or benefits plan on a sale.
Where it appears
The CRA says the amount is entered on line 20600 of the return, from box 52 of the T4 slips or box 034 of the T4A slips. The Income Tax Act leaves the meaning of pension adjustment to regulation: s. 248(1) says it has the meaning assigned by regulation. The CRA’s Pension Adjustment Guide says no PA is reported for individual or group RRSPs or for pooled registered pension plans.
What to ask
- Which plans the person belongs to, and whether each is a registered pension plan or a deferred profit sharing plan.
- Whether the employer reports a PA on the T4 slips.
- The person’s current RRSP deduction limit, shown in their CRA account.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Canada Revenue AgencyGovernmentPension adjustment
- 02Canada Revenue AgencyGovernmentPension Adjustment Guide
- 03Government of Canada (Department of Justice)GovernmentIncome Tax Act, section 248 (definitions, including business)
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