Author Topic: Pension adjustment calculation  (Read 1177 times)

bluebelle

  • Pencil Stache
  • ****
  • Posts: 610
  • Location: near north Ontario
Pension adjustment calculation
« on: May 31, 2021, 09:39:41 AM »
Can anyone explain how my pension adjustment number is calculated?  I admit I've not looked at it closely enough....

Using 2020 numbers:
$4,289.27 - employer contributions
$4,361.99 - my contributions to the group RRSP (which I claim as an RRSP contribution)

Why is the pension adjustment on my T4 so much higher at $10,931 - where does that number come from?  That high number means that my RRSP contribution limit for 2021 is lower than I'd expect.   FYI, PA number seems to always be higher than I'd expect.
« Last Edit: May 31, 2021, 10:00:37 AM by bluebelle »

ThreeWheeler

  • 5 O'Clock Shadow
  • *
  • Posts: 20
Re: Pension adjustment calculation
« Reply #1 on: June 01, 2021, 09:36:31 AM »
What type of pension plan do you have at work?

For the Group RRSP you should get a contribution slip that you claim at tax time which is what it sounds like is happening.

For the company pension plan a Defined Contribution Pension Plan generates a Pension adjustment equal to the contributions made, both yours and the employers. For a Defined Benefit Pension Plan the the Pension Adjustment = (9 x annual accrued benefit) - $600

e.g. if your benefit is the maximum of 2% and your income is 100,000 your PA would be 9*2%*100,000-600 = 17,400
« Last Edit: June 01, 2021, 12:45:12 PM by ThreeWheeler »

bluebelle

  • Pencil Stache
  • ****
  • Posts: 610
  • Location: near north Ontario
Re: Pension adjustment calculation
« Reply #2 on: June 02, 2021, 08:58:51 AM »
What type of pension plan do you have at work?

For the Group RRSP you should get a contribution slip that you claim at tax time which is what it sounds like is happening.

For the company pension plan a Defined Contribution Pension Plan generates a Pension adjustment equal to the contributions made, both yours and the employers. For a Defined Benefit Pension Plan the the Pension Adjustment = (9 x annual accrued benefit) - $600

e.g. if your benefit is the maximum of 2% and your income is 100,000 your PA would be 9*2%*100,000-600 = 17,400
sorry, pension type is an important piece of info.....it's a defined contribution, I contribute 6%, they contribute 5.9%.   And the amount I contribute gets deducted from the left over RRSP room after the previous year PA is subtracted.

And I've realized it is an ID10T error on my part.....I thought I was looking at a year end statement, but December's statement is only July - December.   When I add in Jan - June, miraculously, it adds up to the PA number reported on my T4.