What is the relationship between the DG Pension Plan and my RRSP contributions?
Tax laws take into account the pension you are accumulating in the DGPP (defined benefit plan) in order to set a ceiling for tax-deductible RRSP contributions.
In 2019, Plan members will generally be able to make the following RRSP contributions:
Unused contribution room prior to 2018
18 % of earned income* in 2018 or maximum $26,500
Pension adjustment (PA) for 2018
The Pension Adjustment appearing in box 52 of your T4 slip corresponds to the value of the vested pension in the DGPP during the taxation year, i.e.:
PA = (9 X year’s pension) - $600
1 Year's pension (calculated with the 2017 salary) = $675
In case of termination in the DGPP before age 55 and the transfer of the value of your vested pension to a locked-in account, a verification of the pension adjustment (PA) is made. If the sum of the declared PA for the years after 1990 is higher than the value of the pension, a pension adjustment reversal (PAR) is sent to the former participant, which gives him unused contribution for his RRSP from the year of his termination.
* As a Desjardins Group employee, you can usually calculate your 2019 RRSP contribution limit based on your 2018 salary, if it's your only earned income.