# PA Calculation Examples

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 2021 BE is: (2% × \$90,000.00) − (0.7% × 61,600.00) = \$1,368.80

### Step 2: Calculate the pension adjustment (PA)

Using the BE calculated above, the 2021 PA is: (\$1,368.80 × 9) − \$600.00 = \$11,719.20 (rounded to the nearest dollar)

Report the PA (\$11,719), 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 2021 BE is: (2% × \$90,000.00) − (0.7% × 61,600.00) = \$1,368.80

### 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 2021 is: (\$1,368.80 × 9) − \$600.00 = \$11,719.20
2. Prorate the PA using the member's RPT ratio: 75% × \$11,719.20 = \$8,789.40

Report the PA (\$8,789), 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 2021 BE is: (2% × \$90,000.00) − (0.7% × \$61,600.00) = \$1,368.80

### 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 2021 is: (\$1,368.80 × 9) − \$600.00 = \$11,719.20
2. Prorate the PA by the number of hours the member worked compared to the full-time equivalent: 63% × \$11,719.20 = \$7,383.10

Report the PA (\$7,383), 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, 2021 to April 28, 2021. The second salary rate, \$90,000.00, is effective from April 29, 2021 to December 31, 2021.

### 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 2021 BE is: (2% × \$86,767.12) − (0.7% × 61,600.00) = \$1,304.14

### Step 3: Calculate the pension adjustment (PA)

Using the BE calculated above, the 2021 PA is: (\$1,304.14 × 9) − \$600.00 = \$11,137.26

Report the PA (\$11,137), 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, 2021.

### Step 1: Calculate the benefit entitlement (BE)

Based on a full year of credit and an annual salary of \$90,000.00, the 2021 BE is: (2% × \$90,000.00) − (0.7% × 61,600.00) = \$1,368.80

### 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 2021 is: (\$1,368.80 × 9) − \$600.00 = \$11,719.20
2. Prorate the PA by the number of calendar days the member participated in the Plan: (193 ÷ 365) × \$11,719.20 = \$6,196.73

Report the PA (\$6,197), rounded to the nearest dollar, to CRA.