Pension adjustment reversal (PAR)

An employee whose membership in a plan ends may be eligible for a PAR. It undoes part of an earlier pension adjustment, which reduces RRSP room. See what happens to the pension or benefits plan on a sale.

How the CRA describes it

In a deferred profit sharing plan or a money purchase registered pension plan, the CRA says the PAR is the amount of employer contributions the individual is not entitled to, the forfeited amount, when membership ends. In a defined benefit provision, it is generally the amount of the member’s pension adjustments and past service pension adjustments that exceed the lump-sum payment of benefits. Specified multi-employer plans do not qualify for PARs.

Who calculates and reports it

The CRA guide says administrators of registered pension plans, and trustees or employers of deferred profit sharing plans, calculate PARs and report them quarterly. A PAR is added to RRSP contribution room for the year the membership ended. It is not calculated for RRSPs, pooled registered pension plans or foreign pension plans.

What to ask

Staff leaving a plan can ask the plan administrator whether a PAR was reported. These are federal tax rules, described here as the CRA states them.