What is a Past Service Pension Adjustment (PSPA)?

Unlike a Pension Adjustment (PA), a PSPA is not reported on your T4 income tax slip and they are very rare. A PSPA adjustment can result from three basic changes:

1)    Your employer improves your pension plan benefits retroactively.

2)    Your Pension improves because you can buy-back past pensionable service.

3)    You have changed employment and you transfer from one employer to another employer under an agreement that your service under the old employer will be credited under the new pension plan, resulting in an improvement in your pension benefits.

Under the rules for PSPA resulting from buy-backs of past service pension room, you may be required to withdraw RRSP funds to balance the increased pension benefits and your allowable RRSP contributions.

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