Tax information for active members
Learn about your pension and income taxes, including what you need to know about pension adjustment amounts and your RRSP contribution limit.
Pension contributions and RRSPs
The Canada Revenue Agency (CRA) allows Canadians to contribute to registered retirement savings vehicles and receive a tax deduction on the amount contributed. The most common retirement savings vehicles are registered pension plans (like BC's Municipal Pension Plan) and registered retirement savings plans (RRSPs).
Since you are already paying into a registered pension plan, the CRA will reduce the amount you can contribute to an RRSP by what is known as a pension adjustment amount.
Your pension adjustment amount represents the value of the pension benefits you earned in the previous year. It is calculated by the plan each year using a formula determined by the CRA.
In most cases, you can find your pension adjustment amount on your annual T4 information slip. Some members will receive a separate T4A.
You can find the total value of your RRSP contribution room for the current year on the CRA notice of assessment you receive after you file your income tax.
Your pension adjustment may increase or decrease if:
- You transfer service to or from another pension plan
- You transfer your pension benefits out of the plan
- You buy service
Any change in the amount of your pension adjustment will affect the amount you can contribute to an RRSP.