| As we mentioned in other articles the | | | | employment; it is reported as a separate amount |
| government only represents about 30% of our | | | | on a T10 slip. |
| retirement income, the company retirement | | | | 5. Since 1999, Revenue Canada has allowed |
| pension plan offers another 30 % and many of us | | | | tax-free RRSP withdrawals to finance full time |
| do not have one. It is up to individuals to invest | | | | education for you or your spouse, with the total |
| wisely short and long term in order to make up | | | | withdrawn not exceeding $20,000 over 4 calendar |
| for the short fall if he or she would like to live | | | | years and funds must be returned to the RRSP |
| comfortably after retirement without giving up | | | | over a 10 year period. |
| some retirement plans. In fact, besides | | | | II. Pension adjustment effects your RRSP |
| understanding the company retirement pension | | | | contribution room |
| plan it is for your own benefit to know how | | | | 1. The PA reduces your RRSP contribution |
| pension adjustments (PA) affects your RRSP | | | | amount since you earn pension benefits through |
| contribution room. | | | | your employer's respective pension plan and your |
| I. Understand your pension adjustment and | | | | RRSP is limited to 18% of the previous year`s |
| benefits | | | | income up to $20,000 in the year of 2008 that |
| 1. The PA represents pension benefits accruing to | | | | varies every year with adjustment to inflation |
| you under a company pension plan or deferred | | | | index. |
| profit-sharing plan that will reduce your RRSP | | | | 2. In determining your RRSP contribution limit for |
| contribution room. | | | | the following year, Revenue Canada takes 18% |
| 2. Under defined benefit pension plans, the actual | | | | of your earned income for the year up to the |
| contributions made are generally far less than the | | | | maximum limit, $20,000 and then reduces it by |
| PA. | | | | your PA contribution amount. |
| 3. When you leave an employer (particularly after | | | | For example, if your PA amounts to $9,000 per |
| a short period), the benefits you are entitled to | | | | year and your maximum RRSP contribution |
| are often far less than your accumulated PA's. | | | | amount is $20,000, you may place $11,000 into |
| 4. The PA is generally added to your RRSP | | | | your RRSP. |
| contribution room in the year you cease | | | | |