The Pension Adjustment (PA) is a figure on T4 box 52 that represents the value of pension benefits a worker earned in the year through a registered pension plan or deferred profit sharing plan. The PA reduces RRSP contribution room available the following year, dollar-for-dollar.
How PA is calculated
For Defined Contribution plans, the PA equals total employee plus employer contributions to the DC plan in the year. For Defined Benefit plans, the PA is calculated using a formula based on benefits accrued (typically about 9 × annual benefit increase, minus $600).
Why PA matters
PA prevents double-dipping: workers earning pension benefits cannot also contribute the full RRSP limit. A DB plan member with a $14,000 PA on $80,000 income (which would generate $14,400 of RRSP room) has only $400 of new RRSP room next year ($14,400 − $14,000).
PAR — Pension Adjustment Reversal
If a worker leaves a DB plan and the commuted value transferred is less than the cumulative PAs, a Pension Adjustment Reversal restores some prior-year RRSP room. PAR is reported on T10 from the former employer.