Pension Adjustments

posting date Revised: February 1, 2022 print page Print this page Email link to page Email the link

Canada’s Income Tax Act (ITA) limits the total amount of tax-sheltered retirement savings individuals may accumulate. Under the ITA, pension benefits earned after 1989 reduce the individual’s available RRSP contribution room. The amount of this reduction is referred to as a “pension adjustment” (PA). Each year, the PA for an employee’s current employment pension service is reported on the T4 issued by the employer.

Certain types of buybacks for post-1989 service also reduce the employee’s RRSP room. In some cases, the buyback will result in an additional PA. Depending on the circumstances, OPTrust will either:

  • calculate the buyback-related PA, report it directly to the Canada Revenue Agency (CRA) and issue a T4A to the employee, or
  • send the employer a request to amend the PA amount reported on the employee’s annual T4
Leaves of Absence and Temporary Part-time Work Arrangements

OPTrust calculates Pension Adjustments (PAs) for the following LOA and temporary part-time work arrangement purchases and reports them to CRA.

For CORPAY employers:

  • The LOA or temporary part-time work arrangement must end in the tax-reporting year
  • OPTrust must receive the member’s signed Agreement to Purchase Credit (OPTrust 1017) before April 30th of the following year

For non-CORPAY employers (agencies, boards and commissions):

  • The LOA or temporary part-time work arrangement must end in the tax-reporting year
  • OPTrust must receive the member’s signed Agreement to Purchase Credit (OPTrust 1017) before April 30th of the following year
  • The member must pay for the buyback in a lump sum

Reminder! Employers are responsible for calculating and submitting a PA to CRA for the member’s reduced hours worked during a temporary part-time work arrangement.

For all other cases where a PA is required, OPTrust will continue to send a request to the employer to amend the PA reported on the individual employee’s T4.  


Non-Contributory Service

For purchases of prior non-contributory service, OPTrust will continue to provide the necessary information to the employer to amend the PA.

For more information on PA reporting, please see the "Tax Reporting and Pension Adjustment" section.