PA Calculation Examples

What's on this page:

    We've prepared the following examples to show you how PAs are calculated in various scenarios.

    Important: We prepared these examples using the methodology provided in Canada Revenue Agency's Pension Adjustment Guide.

    Example 1: PA calculation for a full-time member

    Step 1: Calculate the benefit entitlement (BE)

    Based on a full year of credit and an annual salary of $90,000.00, the 2023 BE is: (2% × $90,000.00) − (0.7% × 66,600.00) = $1,333.80

    Step 2: Calculate the pension adjustment (PA)

    Using the BE calculated above, the 2023 PA is: ($1,333.80 × 9) − $600.00 = $11,404.20 (rounded to the nearest dollar)

    Report the PA ($11,404), rounded to the nearest dollar, to CRA.

    Example 2: PA calculation for a regular, part-time member

    Details:

    The member works 75% (RPT Ratio) of your organization's full-time equivalent. The salary rate at the full-time equivalent is $90,000.00.

    Step 1: Calculate the benefit entitlement (BE)

    Based on a full year of credit and a full-time annual salary of $90,000.00, the 2023 BE is: (2% × $90,000.00) − (0.7% × 66,600.00) = $1,333.80

    Step 2: Calculate the pension adjustment (PA)

    1. Using the BE calculated above, the PA for a member paid at the full-time rate in 2023 is: ($1,333.80 × 9) − $600.00 = $11,404.20
    2. Prorate the PA using the member's RPT ratio: 75% × $11,404.20 = $8,553.15

    Report the PA ($8,553), rounded to the nearest dollar, to CRA.

    Example 3: PA calculation for an unclassified member

    Details:

    By year-end, you determine that a member employed on an unclassified basis (variable hours) has worked 63% of the hours of the full-time equivalent.

    Step 1: Calculate the benefit entitlement (BE)

    Based on a full year of credit and an annual salary of $90,000.00, the 2023 BE is: (2% × $90,000.00) − (0.7% × $66,600.00) = $1,333.80

    Step 2: Calculate the pension adjustment (PA)

    1. Using the BE calculated above, the PA for a member paid at the full-time rate for 2023 is: ($1,333.80 × 9) − $600.00 = $11,404.20
    2. Prorate the PA by the number of hours the member worked compared to the full-time equivalent: 63% × $11,404.20 = $7,184.65

    Report the PA ($7,185), rounded to the nearest dollar, to the CRA.

    Example 4: PA Calculation for a member whose salary rate changes

    Details:

    The first salary rate, $80,000.00, is effective from January 1, 2023 to April 28, 2023. The second salary rate, $90,000.00, is effective from April 29, 2023 to December 31, 2023.

    Step 1: Calculate the annual salary for benefit entitlement

    Calculate the weighted average to determine the annual salary: (118 ÷ 365) × $80,000.00 + (247 ÷ 365) × $90,000.00 = $86,767.12

    Note: Use 366 days for leap years.

    Step 2: Calculate the benefit entitlement (BE)

    Based on a full year of credit and an annual salary of $86,767.12, the 2023 BE is: (2% × $86,767.12) − (0.7% × 66,600.00) = $1,269.14

    Step 3: Calculate the pension adjustment (PA)

    Using the BE calculated above, the 2023 PA is: ($1,269.14 × 9) − $600.00 = $10,822.26

    Report the PA ($10,822), rounded to the nearest dollar, to CRA.

    Example 5: PA calculation for a partial year

    Details:

    A full-time employee terminated PSPP membership on July 12, 2023.

    Step 1: Calculate the benefit entitlement (BE)

    Based on a full year of credit and an annual salary of $90,000.00, the 2023 BE is: (2% × $90,000.00) − (0.7% × 66,600.00) = $1,333.80

    Step 2: Calculate the pension adjustment (PA)

    1. Using the BE calculated above, the PA for a member paid at the full-time rate for 2023 is: ($1,333.80 × 9) − $600.00 = $11,404.20
    2. Prorate the PA by the number of calendar days the member participated in the Plan: (193 ÷ 365) × $11,404.20 = $6,030.17

    Report the PA ($6,030), rounded to the nearest dollar, to CRA.