Newsletter no. 94-3R1, Using Assumptions to Compute the Present Value of Benefits

From: Canada Revenue Agency

February 9, 2021

This newsletter cancels and replaces Newsletter 94-3R, dated October 21, 2008.

What's new?

In this newsletter you will find information on the following:

  • Updated assumptions acceptable to the Canada Revenue Agency (CRA), when computing the present value of benefits
  • How to contact the Registered Plans Directorate for additional information


Paragraph 8502(j) of the Income Tax Regulations requires that when you use assumptions to determine amounts under a registered pension plan (RPP), the assumptions used must be reasonable and acceptable to the Minister of National Revenue.

The determination of whether an assumption or a set of assumptions is reasonable can only be made on the merits of each case and within the scope of the professional guidelines issued by the Canadian Institute of Actuaries (CIA). In this newsletter we do not comment on what is reasonable. However, what we accept in each case can be assumed to be reasonable. What we accept as reasonable in one case may not be reasonable for a similar case at another point in time.

In this newsletter we provide some guidelines on the assumptions that are acceptable to the CRA when computing the present value of benefits in connection with a defined benefit provision of an RPP. These guidelines apply to computations made on or after December 1, 2020.

The information provided applies only to situations when a single lump-sum amount is to be paid in lieu of a pension under a defined benefit provision of an RPP.

The information does not apply:

  • when using assumptions to recommend the eligible contributions to be made by an employer under a defined benefit provision
  • when using assumptions to compute the amount to be transferred from one defined benefit provision to another defined benefit provision
  • when using assumptions to commute benefits on the replacement of a defined benefit provision with a money purchase provision

What is acceptable?

We accept any of the following:

  • the assumptions set out in the Standards of Practice issued by the CIA for the Computation of Transfer Values from Registered Pension Plans as amended from time to time (applicable CIA's Standards of Practice) along with the accompanying Educational Notes 
  • the use of a retirement age that would result in the highest present value (optimal retirement age) when required by plan terms or by the plan administrator, along with all other assumptions set out in the applicable CIA’s Standards of Practice; where at the time of calculation
    • the optimal retirement age cannot be later than the end of the month after the month the member turns 65 years old for members who have not yet attained age 65 
    • the optimal retirement age must be the member’s actual age for members who are 65 or older
  • where mandated under the federal Pension Benefits Standards Act, 1985, or a similar law of a province, the assumptions specified in the applicable legislation or in a policy bulletin published by the applicable government regulator
  • other assumptions that are reasonable at the time they are used and that produce present values that do not exceed the present values produced using the assumptions set out in the applicable CIA Standards of Practice

Accepting the use of other assumptions

We recommend you write to get our acceptance if you want to use assumptions other than those described above. You must provide the actuarial reasoning to justify the use of your assumptions.

If you wish to discuss the use of your assumptions before writing to us, you can call the Registered Plans Directorate. We will provide advice on the assumptions you wish to use. However, we caution that the advice provided by telephone is not binding on the CRA. With written approval, you can be assured that the Directorate has accepted your assumptions.

Where to get help

Registered Plans Directorate

You can find more information at Savings and pension plan administration.

By telephone

Toll-free in Canada and the United States: 1-800-267-3100

If you are calling from outside of Canada or the United States, call us collect at 613-221-3105. The Registered Plans Directorate accepts collect calls.

By mail

Registered Plans Directorate
Canada Revenue Agency
Ottawa ON  K1A 0L5

By courier

Information Holdings Operation Section – Registered Plans
Registered Plans Directorate
Canada Revenue Agency
875 Heron Road, B70
Ottawa ON  K1A 1A2

We welcome feedback on this newsletter. Send comments by email to

Report a problem or mistake on this page
Please select all that apply:

Thank you for your help!

You will not receive a reply. For enquiries, contact us.

Date modified: