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1996-003-e.html
SUPERANNUATION ADMINISTRATION MANUAL
SPECIAL BULLETIN: 1996-003
Appendix "A"
April 23, 1996
SUBJECT: Past Service Elections and the Past Service Pension Adjustment
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1 |
PURPOSE |
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1.1 |
The purpose of this Bulletin is to provide further details regarding the changes to past service elections under the Public Service Superannuation Act (PSSA) as described in Compensation Flash 1996-1 dated January 6, 1996. |
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2 |
POLICY |
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2.1 |
As explained previously, a Past Service Pension Adjustment (PSPA) must be reported to Revenue Canada for all elections and Reciprocal Transfers in respect of post-1989 service. The PSPA, like the Pension Adjustment (PA) reduces an employee's RRSP "room" for the year in which the PSPA is approved by Revenue Canada. For elections made prior to April 1, 1996 where the PSPA is not approved, the election remains valid in accordance with the Public Service Superannuation Act, and the employee's future RRSP "room" may be reduced. However, where the election is made on or after April 1, 1996, if the PSPA is not approved, the election in respect of affected service will be invalid. |
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2.2 |
The Public Service Superannuation Act also specifies that an employee may elect for a part of a period of service, but only that part which is most recent in point of time. Therefore, an election which includes both post-1989 and pre-1990 service may be invalid because the PSPA has not been approved for the post-1989 service. In some cases where the PSPA is not approved, the complete election may be invalid and in other cases, only a portion of the election may be invalidated, depending on whether the elective service is full or part-time, and on whether the election is for one or more types of service. The "most recent" provision does not apply to part-time service, or to full-time service if it occurred before the part-time service. |
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2.3 |
Services Pay Directive 1992-008 dated February 26, 1992 explained the PSPA process and provided a number of examples of the calculations, as well as questions and answers related to the PSPA and to the tax deductibility of past service contributions. Attached are examples of the PSPA calculation and a modified Question and Answer section of that directive which will assist in responding to employees' questions. |
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3 |
PROCEDURES/INSTRUCTIONS PSPA and "most recent" service |
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3.1 |
The "most recent" provision applies to a specific period or "type" of service, and does not apply to elections for part-time service. The following examples will illustrate how a past service election may be affected where the PSPA for post 1989 service is not approved. (See Superannuation Administration Manual 3.5.2) Note: for these examples, the election date is on or after April 1, 1996, and the PSPA for the post-1989 service has not been approved. Example 1: Elective Service:
14/6/1991 to 26/3/1994
Full-time Public Service The full election is invalid. The service is all post-89 service and the PSPA has not been approved. Example 2: Elective Service:
12/5/1987 to 26/3/1994
Full-time Public Service The full election is invalid. The PSPA has not been approved; because the service "most recent" is not elective, the earlier part of the same "type" of service is not elective. Example 3: Elective Service:
12/5/1987 to 26/3/1994
Full-time Public Service 13/10/1981 to 12/6/1984
Full-time Public Service The full election is invalid. The PSPA has not been approved; because the service "most recent" is not elective, the earlier part of the same "type" of service is not elective. Example 4: Elective Service:
14/6/1990 to 26/3/1994
Full-time Public Service 2/2/1985 to 4/4/1989
Pensionable Employment Part of the election is invalid. The PSPA has not been approved, so the service from 14/6/1990 is not elective. However, the election for the service from 2/2/1985 to 4/4/1989 remains valid since it is a separate type of service and is not impacted by the "most recent" provision. Example 5: Elective Service:
12/5/1987 to 26/3/1994
Full-time Public Service 2/2/1985 to 4/4/1987
Pensionable Employment Part of the election is invalid. The PSPA has not been approved, so the service from 12/5/1987 to 26/03/1994 is not elective, (see Example 2). However, the election for the service from 2/2/1985 to 4/4/1987 remains valid since it is a separate type of service and is not impacted by the "most recent" provision. Example 6:
12/5/1987 to 26/3/1994
Part-time Public Service
Part of the election is invalid. The PSPA has not been approved, so the service from 01/01/1990 to 26/03/1994 is not elective. However, the election for the service from 12/5/1987 to 31/12/1989 remains valid since the "most recent" provision does not apply to elections for part-time service. Example 7: Elective Service:
12/6/1989 to 26/3/1994
Part-time Public Service 12/5/1987 to 11/6/1989
Full-time Public Service Part of the election is invalid. The PSPA has not been approved, so the service from 01/01/1990 to 26/03/1994 is not elective. The service from 12/5/1987 to 31/12/1989 is countable because the "most recent" provision does not apply to the full-time service if it occurred before the part-time service. The "most recent" provision does not apply to part-time service, so the Part-time service prior to 1990 is also countable. Example 8: Elective Service:
16/11/1991 to 26/3/1994
Part-time Public Service 12/5/1987 to 15/11/1991
Full-time Public Service The full election is invalid. The PSPA has not been approved, so the service from 16/11/1991 to 26/03/1994 is not elective; also, the full period from 12/5/1987 to 15/11/1991 is not elective since the PSPA is not approved for the "most recent" part of that service. Example 9: Elective Service:
16/11/1991 to 26/3/1994
Part-time Public Service 12/5/1987 to 15/11/1991
Full-time Public Service 7/9/1983 to 14/3/1985
Full-time Public Service The full election is invalid. The PSPA has not been approved, so the service from 16/11/1991 to 26/03/1994 is not elective. The service from 12/5/1987 to 15/11/1991 and from 7/9/1983 to 14/3/1985 is not elective since the PSPA is not approved for the "most recent" part of that type of service. |
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3.2 |
Where a period of full-time service includes both post-1989 and pre-1990 service, the employee cannot elect for only the pre-1990 service to avoid the PSPA requirements. The "most recent" provisions must be applied to the election and the application of that provision will require the reporting of the PSPA. The PSPA process |
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3.3 |
When an employee elects for past service the Superannuation Directorate determines whether the election is valid. Where an election includes post-1989 service, once the election is finalized, a report (T1004) is sent to Revenue Canada to request approval of the PSPA. If the employee has enough available RRSP "room", the PSPA is approved and Revenue Canada reduces the employee's available RRSP "room" for the year the PSPA is approved. Copies of the T1004 (Certification of the PSPA) are returned to the Superannuation Directorate, and then forwarded to the Compensation specialist for transmittal to the employee. A new RRSP "room" statement from Revenue Canada is also sent directly to the employee. |
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3.4 |
If the employee does not have sufficient RRSP "room", Revenue Canada will advise the individual accordingly and give the employee an opportunity to withdraw funds from his/her RRSP to create the needed "room". If the employee does not de-register RRSP funds within the time prescribed by Revenue Canada (usually within 30 days of the Taxation notice), Revenue Canada will advise the Superannuation Directorate that the PSPA has not been approved. |
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3.5 |
Upon receipt of the notice from Revenue Canada that the PSPA is not approved, the Superannuation Directorate will invalidate the election for the affected service. The contributions paid for the elective service will be refunded to the employee and taxed accordingly. If only a portion of the election is invalid, the employee is given the option of receiving a refund for the invalid service or applying the refund to the balance of the election to reduce the monthly cost of the election or to reduce the payment period. The PSPA calculation |
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3.6 |
The PSPA is not related to the cost of past service; it is the pension value assigned to that service and is used to reduce an employee's RRSP "room". |
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3.7 |
There are a number of steps involved in the PSPA calculation. The attached examples indicate how the PSPA is calculated in a variety of situations. The first step is to calculate a Pension Adjustment, based on the pensionable earnings at the time the service occurred and the benefit rate under the PSSA. |
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3.8 |
If the employee had not been subject to a pension plan when the service occurred, (e.g. the 6 months qualifying period, or part-time non-contributory service), the PSPA will equal the PA that would have been reported as if the employee were a PSSA contributor when the service occurred. |
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3.9 |
If the employee had been subject to a defined benefit pension plan when the service occurred, (e.g. prior contributory Public Service, Pensionable employment with a defined benefit plan, CFSA service etc.) The PSPA is calculated as follows:
| i) |
A Pension Adjustment (PA) is calculated based on the pensionable earnings at the time the service occurred and the benefit rate under the PSSA. |
| ii) |
The original PA reported for that period of service is subtracted from the new PA. |
| iii) |
If the employee had received a Return of Contributions (ROC) for the service and had transferred those contributions to an RRSP, the amount transferred to an RRSP in respect of post-1989 service is added to the first calculation. |
| iv) |
If the employee transfers funds from an RRSP to pay for the past service, the RRSP transfer (or "qualifying transfer") will be subtracted. |
| v) |
The result is reported to Revenue Canada as the PSPA. (New PA minus old PA plus ROC transfer to an RRSP minus RRSP transfer to the PSSA.) |
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3.10 |
If the employee had been subject to a money purchase pension plan (e.g Pensionable employment under a money purchase pension plan), the PSPA will be equal to the PA that would have been reported if the employee were a PSSA contributor when the service occurred. If the employee transfers funds from an RRSP or from the other Registered Pension Plan (RPP) to pay for the past service, the RRSP transfer (or "qualifying transfer") will be subtracted from the new PA. The result is reported to Revenue Canada as the PSPA. (new PA minus RRSP or RPP transfer to the PSSA). |
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3.11 |
The formula for calculating RRSP "room" for PSPA purposes only is as follows: $8,000.00 plus member's unused RRSP room at the end of the immediately preceding tax year, minus the PSPA reported by the Superannuation Directorate. Note that the $8,000.00 "overcontribution" is available for PSPA purposes only and cannot be used for regular RRSP contributions. |
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4 |
INQUIRIES |
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4.1 |
Any request for information regarding the foregoing should be addressed to your PWGSC Client Services Centre as per Compensation Directive 1994-039 dated October 6,1994. |
Original Signed by
J. A. Boudreau
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P. Charko
Director General
Compensation Sector
Government Operational Service
APPENDIX A
QUESTIONS AND ANSWERS
| 1. |
WHAT IS THE PAST SERVICE PENSION ADJUSTMENT? The Past Service Pension Adjustment (PSPA) is the value of the benefit accrued for a period of post-1989 elective or Reciprocal Transferred service. It is similar to the Pension Adjustment (PA), but is reported in respect of past service rather than current service. |
| 2. |
WHAT IS THE PURPOSE OF THE PSPA? The PSPA is used to reduce an employee's RRSP "room" for the year that the PSPA is approved by Revenue Canada. The PSPA is produced to take into account the additional pension credits given to an employee under the PSSA as a result of the addition of the past service credit. |
| 3. |
WHY IS RRSP ROOM REDUCED WHEN AN EMPLOYEE ELECTS FOR POST-1989 SERVICE? The contributions paid in respect of post-1989 service are fully tax deductible. In order to off-set this tax deduction, an employee's RRSP "room" is reduced. This is to ensure that the employee cannot receive an undue tax advantage by accruing benefits under an RRSP and an Registered Pension Plan without respecting certain tax limits. |
| 4. |
HOW DOES REVENUE CANADA DETERMINE WHETHER A PSPA WILL BE APPROVED? Revenue Canada compares the PSPA reported by the Superannuation Directorate to the employee's unused RRSP "room" at the end of the immediately preceding taxation year. Where the PSPA is less than "available RRSP room", the PSPA will be approved. Where the PSPA is less than "available RRSP room" plus $8,000, the PSPA will also be approved, and the RRSP "room" will be placed in a negative balance, i.e. future RRSP "room" will be reduced by the excess amount. Where the PSPA is in excess of the "available RRSP room plus $8,000", the PSPA will not be approved. Example : Employee's RRSP "room": $18,756.00
PSPA reported $22,687.00
The PSPA is less than the available room of $18,756.00 plus the additional $8,000.00 so the PSPA is approved. The employee's RRSP "room" for the current year is reduced to "0", and the RRSP "room" will be adjusted to a negative balance of $22,687 minus $18,756 = minus $3,931.00. |
| 5. |
HOW CAN AN EMPLOYEE REDUCE THE PSPA THAT WILL BE REPORTED TO TAXATION? If an employee transfers money from an RRSP at the time he makes an election, the direct transfer will reduce the PSPA to be reported to Revenue Canada. A transfer from an RRSP made after the PSPA has been reported to Taxation will not reduce the PSPA. |
| 6. |
IS THE EMPLOYEE ADVISED IF HE DOES NOT HAVE SUFFICIENT RRSP "ROOM" TO SUPPORT A PSPA? Yes, Revenue Canada will advise the employee that there is not sufficient room to approve the PSPA before they advise the Superannuation Directorate that the PSPA has been denied. This will give the employee an opportunity to open up RRSP "room" before the election is invalidated. |
| 7. |
WILL REVENUE CANADA ALLOW THE EMPLOYEE TIME TO WITHDRAW FUNDS FROM EXISTING RRSPs IN ORDER TO CREATE RRSP "ROOM" FOR PURPOSES OF THE PSPA APPROVAL? Yes. The employee is given the opportunity to de-register existing RRSPs to create the necessary "room", within a specific time period (normally 30 days). An RRSP transfer at this time will not reduce the PSPA. The employee could, if he chooses, make a cash payment on the election equal to the RRSP withdrawal, and could claim a tax deduction at year end for the full amount of the repayment since it would all be in respect of post 1989 service. |
| 8. |
IF AN EMPLOYEE HAS CONTRIBUTED TO A SPOUSAL RRSP, CAN THE FUNDS IN THE SPOUSAL RRSP BE WITHDRAWN TO CREATE RRSP "ROOM"? No. The employee cannot withdraw funds from a spousal RRSP to create his/her own RRSP "room". Also, an employee cannot transfer funds from a spousal RRSP to the Public Service Superannuation Account to purchase prior service, or to reduce the PSPA. |
| 9. |
WILL THE EMPLOYEE ALWAYS BE ABLE TO WITHDRAW RRSP FUNDS IN ORDER TO CREATE RRSP "ROOM"? This depends on the employee's personal RRSP situation. There are certain types of RRSPs that are "locked-in" and the funds cannot be withdrawn; there are others that are "locked-in" for a specific period of time. The employee should check with his/her financial institution to determine whether funds from his/her particular RRSP can be withdrawn. |
| 10. |
IF THE PSPA IS NOT APPROVED, CAN THE EMPLOYEE STILL ELECT FOR THE SERVICE AND NOT CLAIM THE TAX DEDUCTION? No. In order to respect the Income Tax Act and comply with the tax requirements, the Public Service Superannuation Act has been amended so that the election for affected service is not valid if the PSPA is not approved. |
| 11. |
IF THE PSPA HAS NOT BEEN APPROVED, CAN THE ELECTION BE AMENDED TO INCLUDE ONLY THE SERVICE THAT THE EMPLOYEE'S RRSP "ROOM" WILL SUPPORT? No. If the PSPA is not approved, the election for the affected service will be invalid. If the employee wishes to reduce the period of elective service to cover only the portion for which he has sufficient RRSP "room", or if the employee has increased his RRSP "room" and is able to support the PSPA at a later date, a new election is required. Since a past service election can be made only while the individual is employed in the Public Service and a PSSA contributor, it is important the employees are aware of the PSPA implications, especially if the employee does not complete his past service election until close to retirement. |
| 12. |
CAN AN EMPLOYEE ELECT FOR ONLY THE PERIOD OF SERVICE FOR WHICH PSPA APPROVAL CAN BE OBTAINED? Although an employee can elect for a portion of past service, (the "most recent" service), the PSPA process requires the employee to specify the exact period of elective service on the election form. Revenue Canada cannot provide the Superannuation Directorate with an individual's RRSP "room" limits since this is personal information. However, if the employee is aware of his RRSP "room", it is possible to estimate the portion of service which will receive PSPA approval, by manually calculating the PSPA according to the attached examples. |
| 13. |
CAN AN EMPLOYEE ESTIMATE THE RRSP "ROOM" THAT MAY BE AVAILABLE FOR PSPA APPROVAL? Employees should call their District Taxation Office which will provide them with information about their available RRSP "room". For PSPA purposes ONLY, an additional $8,000.00 of RRSP "room" is permitted. Based on this information, the employee is in a position to calculate his/her own RRSP "room" for PSPA purposes. |
| 14. |
CAN AN EMPLOYEE ALSO ESTIMATE THE PSPA THAT MIGHT BE REPORTED FOR HIS SERVICE? The examples attached to this Bulletin should provide employees with some basic information that can be used to estimate the employee's PSPA. |
| 15. |
IS THE COMPENSATION SPECIALIST REQUIRED TO CALCULATE THE EMPLOYEE'S PSPA? At this time a facility has not been provided to Personnel Offices to calculate the PSPA. A great deal of information is required to produce the PSPA calculation, including: the salaries at the time the service occurred, the amount of funds transferred to an RRSP, whether (for pensionable employment) a previous pension plan was a defined benefit or money purchase plan, the PAs reported for the service etc. The Superannuation Directorate collects this information only when an employee actually completes an election for the service. It is not reasonable to ask the Personnel Office to assemble all the data required to calculate a PSPA when providing an employee with an estimate of the cost of past service since the volume of requests for estimates far exceeds past service elections made. Superannuation Directorate is not in a position to provide the PSPA for estimate cases, due to the volume of estimates and other priorities. |
| 16. |
WHERE THE PSPA HAS BEEN DISALLOWED, IS IT POSSIBLE TO COMPLETE AN ELECTION FOR THE SAME SERVICE AT A LATER DATE? Yes, where a PSPA has not been approved, an employee can complete an election at a later date, when more RRSP "room" may be available. The election would be treated as a completely new election and would have to meet the conditions required for a valid election at that time. An election can be made only while the employee is a contributor to the PSSA; therefore, if an employee waits to elect until just before retirement, and the PSPA is not approved, there may not be an opportunity to re-elect for the service. |
EXAMPLES OF PAST SERVICE PENSION ADJUSTMENT CALCULATIONS
Please note that these are GENERAL EXAMPLES ONLY and do not take into account exact pay periods, bi weekly salary calculations etc. The automated systems designed to perform the actual calculations will take all these factors into consideration.
Example 1
Past service where the employee had not been subject to any pension plan (e.g. 6 month qualifying period)
Service from April 3, 1995 to October 2, 1995
(Total period = 14/26 Pay Periods)
| Salary received for the period: |
$17,500.00 |
| Projected annual salary: |
$35,000.00 |
| YMPE: |
$34,900.00 |
Benefit Entitlement (i.e. the benefit rate under the PSSA):
(0.013 x $34,900.00) + [0.02 x ($35,000.00 - $34,900.00)]
= $453.70 + $2.00 = $455.70
Pension Adjustment (PA):
[(9 x $455.70) - $1,000.00] x 14/26 = ($4101.30 - $1,000.00)x 14/26 = $3101.30 x 14/26 = $1670.00
The PAST SERVICE PENSION ADJUSTMENT (PSPA) is calculated as follows:
| PA from above calculation: |
$1670.00 |
| LESS PA originally reported for period: |
"nil" |
| PSPA to be reported to Revenue Canada: |
$1670.00 |
Example 2
Past service where the employee had not been subject to any pension plan (e.g. part-time elective service)
Service from Jan 1, 1990 to December 31, 1994 (Total period = 5 years)
| Salary received: |
1990 |
$17,500.00 |
YMPE: |
$28,900 |
| Salary received: |
1991 |
$22,500.00 |
YMPE: |
$30,500 |
| Salary received: |
1992 |
$23,400.00 |
YMPE: |
$32,200 |
| Salary received: |
1993 |
$24,200.00 |
YMPE: |
$33,400 |
| Salary received: |
1994 |
$24,500.00 |
YMPE: |
$34,400 |
Benefit Entitlement (i.e. the benefit rate under the PSSA):
0.013 x $17,500.00 = 227.50
0.013 x $22,500.00 = 292.50
0.013 x $23,400.00 = 304.20
0.013 x $24,200.00 = 314.60
0.013 x $24,500.00 = 318.50
Pension Adjustment (PA):
(9 x $227.50) - $1,000.00 = $1,048.00
(9 x $292.50) - $1,000.00 = $1,633.00
(9 x $304.20) - $1,000.00 = $1,738.00
(9 x $314.60) - $1,000.00 = $1,831.00
(9 x $318.50) - $1,000.00 = $1,867.00
The PAST SERVICE PENSION ADJUSTMENT (PSPA) is calculated as follows:
| Total PAs from above calculations: |
$8,117.00 |
| LESS PA originally reported for period: |
"nil" |
| PSPA to be reported to Revenue Canada: |
$8,117.00 |
Example 3
Employee was subject to a defined benefit pension plan and had received a return of contributions which were not transferred to an RRSP.
Service from February 1, 1994 to April 30, 1995
(1994 Total period = 24/26 Pay Periods)
(1995 Total period = 9/26 Pay Periods)
| Salary received for the 1994 period: |
$32,307.00 |
| Projected annual salary: |
$35,000.00 |
| YMPE: |
$34,400.00 |
Benefit Entitlement:
(0.013 x $34,400.00) + [0.02 x ($35,000.00 - $34,400.00)] = $447.20 + $12.00 = $459.20
Pension Adjustment (PA):
[(9 x $459.20) - $1,000.00] x 24/26 = ($4132.80 - $1,000.00) x 24/26 = $3132.80 x 24/26 = $2892.00
| Salary received for the 1995 period: |
$12,634.00 |
| Projected annual salary: |
$36,500.00 |
| YMPE: |
$34,900.00 |
Benefit Entitlement:
(0.013 x $34,900.00) + [0.02 x ($36,500.00 - $34,900.00)] = $453.70 + $32.00 = $485.70
Pension Adjustment (PA):
[(9 x $485.70) - $1,000.00] x 9/26 = ($4,371.30 - $1,000.00) x 9/26 = $3,371.30 x 9/26 = $1,167.00
Total 1994 PA + 1995 PA = $2,892.00 + $1,167.00 =$4,059.00
The PAST SERVICE PENSION ADJUSTMENT (PSPA) is calculated as follows:
| Total PA from above calculation: |
$4,059.00 |
|
| * LESS PA originally reported for the period: |
- $4,967.00 |
|
| PSPA to be reported to Revenue Canada: |
"nil" |
|
Note: If the PSPA is a minus, no PSPA is reported.
Example 4
Employee was subject to a defined benefit pension plan and transferred the return of pension contributions to an RRSP.
Service from September 1, 1994, to July 30, 1995
SWW = 37.50 AWW = 22.50
(1994 Total period = 9/26 Pay Periods)
(1995 Total period = 16/26 Pay Periods)
| Salary received for the 1994 period: |
$10,385.00 |
| Projected annual salary: ($50,000/37.5 X 22.5) |
$30,000.00 |
| YMPE: |
$34,400.00 |
Benefit Entitlement:
0.013 x $30,000.00 = $390.00
Pension Adjustment (PA):
[(9 x $390.00) - $1,000.00] x 9/26 = ($3,510.00 - $1,000.00) x 9/26 = $2,510.000 x 9/26 = $869.00
| Salary received for the 1995 period: |
$18,739.00 |
| Projected annual salary: ($50,750/37.5 X 22.5) |
$30,450.00 |
| YMPE: |
$34,900.00 |
Benefit Entitlement:
(0.013 x $30,450.00) = $395.85
Pension Adjustment (PA):
[(9 x $395.85) - $1,000.00] x 16/26 = ($3,562.65 - $1,000.00) x 16/26 = $2,562.65 x 16/26 = $1,577.00
Total 1994 PA + 1995 PA = $869.00 + $1,577.00 = $2,446.00
The PAST SERVICE PENSION ADJUSTMENT (PSPA) is calculated as follows:
| Total PA from above calculation: |
$2,446.00 |
|
| * LESS PA originally reported for the period: |
- $2,446.00 |
|
| * PLUS contributions transferred to an RRSP: |
+ $1,500.00 |
|
| PSPA to be reported to Revenue Canada: |
$1,500.00 |
|
Example 5
Employee was subject to a money purchase pension plan at the time the service occurred. When the previous service was pensionable employment under a money purchase plan, the previous PAs are not subtracted from the PSPA, and the refund of contributions is not included in the PSPA regardless of whether the refund was transferred to an RRSP.
Service from November 1, 1993 to October 31, 1994
( 1993 = 5/26 Pay Periods) ( 1994 = 22/26 Pay Periods)
| Salary received for the 1993 period: |
$7,452.00 |
|
| Projected annual salary: |
$38,750.00 |
|
| YMPE: |
$33,400.00 |
|
Benefit Entitlement (i.e. the benefit rate under the PSSA):
(0.013 x $33,400.00) + [0.02 x ($38,750.00 - $33,400.00)] = $434.20 + $107.00 = $541.20
Pension Adjustment (PA):
[(9 x $541.20) - $1,000.00] x 5/26 = ($4,870.80 - $1,000.00) x 5/26 = $3,870.80 x 5/26 = $744.00
| Salary received for the 1994 period: |
$33,203.00 |
| Projected annual salary: |
$39,240.00 |
| YMPE: |
$34,400.00 |
Benefit Entitlement (i.e. the benefit rate under the PSSA):
(0.013 x $34,400.00) + [0.02 x ($39,240.00 - $34,400.00)] = $447.20 + $96.80 = $544.00
Pension Adjustment (PA):
[(9 x $544.00) - $1,000.00] x 22/26 = ($4,896.00 - $1,000.00) x 22/26 = $3,896.80 x 22/26 = $3,297.00
Total 1993 PA + 1994 PA = $744.00 + $3,297.00 = $4,041.00
The PAST SERVICE PENSION ADJUSTMENT (PSPA) is calculated as follows:
| Total PA from above calculation: |
$4,041.00 |
| PSPA to be reported to Revenue Canada: |
$4,041.00 |
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