Changes to three Public Service Pension Plans that affect RRSP deduction limits

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The following is now available on the CRA Web site:

Changes to the Public Service (PS), the Canadian Forces (CF), and the Royal Canadian Mounted Police (RCMP) pension plans were announced in the Government of Canada May 2006 Budget, and will be implemented beginning in 2008. These changes lower the reduction formula used to calculate pension benefit amounts under the three public service pension plans, beginning in 2008. The lower reduction formula will increase pension benefits, and will reduce the amount plan members can contribute to their RRSP in the 2009 tax year. For information about the changes to the pension plans, please see Questions and Answers on the Web site of the Treasury Board of Canada Secretariat.

* EXAMPLE

Q.1 How will these changes affect pension plans members?

A.1 The changes the public service pension plans will affect PS, CF, and RCMP pension plan members as follows:

If you are a member of one of the three public sector pension plans, the change to the reduction formula will increase your pension adjustment (PA) for 2008 and future years. As a result, the amount that you can contribute to registered retirement savings plans (RRSP) in the 2009 tax year will be reduced.
If you reach age 65 before January 1, 2008, the new reduction rate will not apply. Your pension plan benefit amount will not be affected, and your RRSP deduction limit will not be reduced as a result of the new reduction factor.

If you will reach age 65 after 2007, the lower reduction factor that will be used to calculate your pension benefits will increase the value of your accrued benefits. Because the value of your accrued benefits increases, your PA reported since 1990 up to 2007 will be revised, and the difference will be reported in 2008 as a past service pension adjustment (PSPA). This PSPA will further reduce the amount that you can contribute to an RRSP in the 2009 tax year. This includes active members and retirees who have opted for a deferred annuity or are receiving an immediate annuity or an annual allowance.

* OTHER QUESTIONS
2. What is a pension adjustment (PA)?
3. How does the PA affect my RRSP contributions?
4. What is a past service pension adjustment (PSPA)?
5. How does the PSPA affect my RRSP contributions?
6. Where can I get information about my PSPA?
7. Do I need to file the T215 information slip with my income tax return?
8. I have never made an RRSP contribution. How will the PA or PSPA impact me?
9. Where can I find information about my 2009 RRSP deduction limit?
10. How can I calculate an estimate of my RRSP deduction limit for the 2009 tax year?
11. What is an “unused” RRSP contribution?
12. What will happen if I have excess contributions to an RRSP?
13. How can I avoid having excess RRSP contributions for the 2009 tax year?
14. What can I do if I have excess RRSP contributions in the 2009 tax year?
15. What is a “negative” RRSP deduction limit?
16. Where can I find more information?

Read All of the answers on the CRA Website

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