Pension Adjustment Reversal (PAR)

Frequently asked questions

1. I terminated my employment in December of 2000 but my funds were transferred to my RRSP in January 2001. Will my RRSP room be restored for 2000 or 2001?
   
   
2. Do I have to file anything with my tax return in respect of the T10 received from my former employer?
   
   
3. An employee has received a PA in respect of 3 years of service in a foreign pension plan. Are they eligible for a PAR?
   
   
4. In the year a connected person joins a Plan a T1007 (Connected Person Information Return) must be filed. When they later terminate membership is this amount included in the PAR calculation?
   
   
5. A member of a Union pension plan that is a Specified Multi Employer Pension Plan (SMEP) terminates membership unvested. Are they eligible for a PAR?
   
   
6. A group of plan members terminate their membership in a registered pension plan and transfer their entitlement to their individual RRSP's. The plan administrator reports PARs as required, using the T10 form. Several years later, the province of Ontario rules that the termination was in fact a partial plan wind-up, and the plan members should have been entitled to increased benefits, based on Ontario's growing-in legislation. The PARs that were reported at the time of termination were therefore excessive. Does the plan administrator have to report amended PARs?

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1. I terminated my employment in December of 2000 but my funds were transferred to my RRSP in January 2001. Will my RRSP room be restored for 2000 or 2001?
A PAR is calculated based on when membership in the plan is terminated, not when employment terminates. Generally you are a member as long as you have $$$ in the plan. In this case the funds were transferred in 2001, and therefore the RRSP room is restored for 2001.

2. Do I have to file anything with my tax return in respect of the T10 received from my former employer?
No, the T10 merely restores the RRSP room that was reduced as a result of your membership in a pension plan or DPSP, and you no longer have an entitlement to a portion of those benefits. The amount in box 2 of the T10 is additional RRSP room that you will have in the year of PAR indicated in box 1 of the T10. The employer is also required to forward a copy of the T10 to the Canada Customs and Revenue Agency.

3. An employee has received a PA in respect of 3 years of service in a foreign pension plan. Are they eligible for a PAR?
No. The definition of PAR states that it is an amount in respect of a DPSP or a benefit provision of a registered pension plan. As the foreign plan is not a registered plan, they are not eligible for a PAR.

4. In the year a connected person joins a Plan a T1007 (Connected Person Information Return) must be filed. When they later terminate membership is this amount included in the PAR calculation?
No. The amount reported in the year a connected person joins a plan is not a pension credit and therefore is not included in the PAR calculation.

5. A member of a Union pension plan that is a Specified Multi Employer Pension Plan (SMEP) terminates membership unvested. Are they eligible for a PAR?
This is a two-part answer. They meet the conditions to be eligible for a PAR, however the regulations state that any pension credits accrued under a SMEP are excluded from the PAR calculation and therefore their PAR will be NIL.

6. A group of plan members terminate their membership in a registered pension plan and transfer their entitlement to their individual RRSP's. The plan administrator reports PARs as required, using the T10 form. Several years later, the province of Ontario rules that the termination was in fact a partial plan wind-up, and the plan members should have been entitled to increased benefits, based on Ontario's growing-in legislation. The PARs that were reported at the time of termination were therefore excessive. Does the plan administrator have to report amended PARs?
Yes, amended PARs should be reported for the original year of PAR. However, the amended PARs should not be reported on the T10 form. The plan administrator should submit a listing that includes the following information.

These listings should be sent directly to:

CRA, IRPPD
Attention: Pension Section
25 MacArthur Rd.
Vanier Towers, Tower C Rm. 826
Ottawa ON K1A 0L5

**** Please note that this policy would apply to other provinces that may have similar growing-in legislation.

For further information and examples of PAR calculations, see the PAR Guide RC 4137.