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Pension & savings plan basics

Pension plan participation and your RRSP Add to ...

​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.

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Pension adjustment

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. 

Content in this section is provided in partnership with Investor Education Fund, a non-profit organization founded and supported by the Ontario Securities Commission that provides unbiased and independent financial tools to help Canadians make better money decisions. To find out more, go to: GetSmarterAboutMoney.ca

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