Plan participation and your RRSP
Your RRSP contribution room is reduced if you participate in a pension plan or deferred profit sharing plan.
The government wants to provide everyone with an equal opportunity for tax-sheltered retirement savings. So if you are in a defined benefit (DB) plan, a defined contribution (DC) plan or a deferred profit sharing plan (DPSP), you won’t be able to contribute as much to your RRSP.
The reduction in your RRSP contribution room is known as a pension adjustment or PA.
- Under a DB plan, your PA is an amount that approximates the value of the pension benefit you earned in the previous year.
- Under a DC or DPSP, your PA is the amount that you and your employer contributed to your plan account in the previous year.