Pension adjustment: 9 × DB benefit minus $600, or DC contributions

Each type of plan has its own pension credit formula

A pension adjustment is an individual's total pension credits for the year with a specific employer canada.ca. Regulation 8301(1) builds it by adding the pension credit under every DPSP and every benefit provision of an RPP the employer participates in, plus any foreign plan or specified retirement arrangement credit laws-lois.justice.gc.ca. Group RRSPs and PRPPs don't produce a PA canada.ca.

The 2026 limits come from the CRA's limits page: a money purchase limit of $35,390, a DB limit of $3,932.22 and a DPSP limit of $17,695 canada.ca. The DB limit is one ninth of the money purchase limit, which is why a member who accrues the maximum DB pension produces a PA close to the money purchase limit: 9 × $3,932.22 is $35,390 before the $600 offset.

T4084 says to round every pension credit to the nearest dollar, and a credit that comes out negative is zero canada.ca. The legal source for the DB formula is Regulation 8301(6), which sets the credit at 9 times the benefit entitlement less the PA offset laws-lois.justice.gc.ca.

A $100,000 DB member at 1.5% and 2% has a 2026 PA of $14,043

The benefit earned is the part of the member's lifetime pension that accrued in the year under the plan's own formula. It leaves out bridging benefits, indexing and early retirement reductions canada.ca. Regulation 8302 calls the same figure the benefit entitlement laws-lois.justice.gc.ca.

Your client earns $100,000 in 2026 and belongs to a DB plan that accrues 1.5% of earnings up to the YMPE and 2% above it. The 2026 YMPE is $74,600.

The benefit earned of $1,627 sits well under the $3,932.22 DB limit, so no cap applies. A member at the cap would show a PA of $34,790 ($35,390 minus $600).

The CRA's own example uses a plan paying 2% of $40,000: a benefit earned of $800, and a pension credit of $6,600 (9 × $800, minus $600) canada.ca.

A 6% plus 6% money purchase member has a $12,000 PA and $6,000 of new 2027 RRSP room

Same $100,000 salary, but a money purchase RPP where your client puts in 6% and the employer matches 6%. The pension credit is the contributions: $6,000 plus $6,000, so box 52 shows $12,000. That is under both the $35,390 money purchase limit and 18% of pay ($18,000).

The PA reduces RRSP room for the next year. The CRA's deduction limit calculation takes the lesser of 18% of prior year earned income and the RRSP dollar limit, then subtracts the PA canada.ca. The 2027 RRSP dollar limit is $35,390 canada.ca.

Unused room carried forward is added on top. The full room formula, the $2,000 buffer and the 2026 figures are on RRSP limit 2026.

A single employer plan keeps the full $600 offset in a partial year, and the PA is capped at 18% of pay

For a single employer DB plan, prorate the benefit earned when the member joins, retires or leaves partway through the year, or works part time. The $600 offset stays whole. In the CRA's flat benefit example, 8 months of service at $40 a month gives a benefit earned of $320 and a credit of $2,280 (9 × $320, minus $600) canada.ca. Only multi employer plans that are not specified multi employer plans prorate the $600 as well.

If a DB provision is reduced by a money purchase or DPSP benefit, subtract one ninth of that other pension credit from the DB benefit earned before you apply the formula, then add both credits together canada.ca. In the CRA's example, a 1.75% DB formula on $40,000 ($700) less $2,000 ÷ 9 ($222.22) leaves $477.78; the DB credit is $3,700 and the total PA is $5,700. Regulation 8302(2)(c) is the source of the one ninth reduction laws-lois.justice.gc.ca.

The PA has a ceiling. Under ITA 147.1(8), a plan becomes revocable if a member's PA with an employer exceeds the lesser of the money purchase limit and 18% of the member's compensation from that employer for the year laws-lois.justice.gc.ca. For 2026, a member paid $60,000 can't have a PA above $10,800, whatever the DB formula says.

Leave and disability periods count as time worked if contributions are made by or for the member, and you use a reasonable estimate of the pay they would have earned canada.ca. A member who leaves before vesting still needs a PA for the year.

The PA goes in box 52 of the T4, in dollars only

Report the PA in dollars only in box 52 of the T4, and enter the 7 digit plan registration number in box 50 canada.ca. If the employee is in more than one of your plans, calculate one PA from all the pension credits and enter the registration number of the plan with the largest PA. On a T4A, T4084 puts the PA in box 34 and the registration number in box 36 canada.ca.

Leave box 52 blank when the calculated PA is zero or negative, when the employee died in the year, or when the employee is still a member but no longer accrues new credits, for example after reaching the plan's maximum years of service canada.ca. An employee who worked in more than one province gets the PA split proportionately across the slips; if you can't apportion it, put the total on one slip.

The PA must be on the T4 or T4A by the last day of February after the year canada.ca. For filing dates and late penalties, see T4 slip deadline.

A PSPA takes RRSP room away later, and a PAR gives it back

Two other figures change RRSP room after the PA. A past service pension adjustment applies when a DB plan upgrades benefits or the member buys back past service, and it's subtracted from RRSP room. A pension adjustment reversal adds room back when a member ends membership in a DB provision, a money purchase provision or a DPSP canada.ca.

The PAR is triggered by leaving the plan, not the job: a former employee who leaves their entitlement in the plan is still a member and gets no PAR canada.ca. For a DB provision, it's generally the PAs and PSPAs reported up to termination minus the commuted value paid out. For a money purchase plan or DPSP, it's the employer contributions that were unvested at termination.