Past Service Pension Adjustment (PSPA)

Calculation sheets

PSPA - Calculation sheet

Basic method

Use this method when:

1. benefits are being upgraded;
2. additional post-1989 years of service are now being purchased;
3. when a member terminates after December 31, 1996, and later re-establishes the past service under the same provision or under another defined benefit provision.

The formula is as follows

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A = calculate the sum of the pension credits as at the past service event date. In other words calculate the sum of the pension credits as if the new DB formula had been in effect for all post-1989 pensionable service being purchased or upgraded.

B = the sum of the old DB PAs and PSPAs that were previously reported for the pensionable service being purchased or upgraded.

C = qualifying transfers. This is the amount that is made available or transferred into the new DB provision from an RRSP, DPSP, SMEP or from a money purchase provision of an RPP, that can reasonably be considered to have been transferred or made available to fund post-1989 benefits.

D = Excess money purchase transfers. An excess money purchase transfer arises when an individual terminates from a DB provision after 1998, transfers their entitlement to a money purchase vehicle (ex. an RRSP) and later re-establishes the past service benefits under the same or another DB provision. The excess money purchase transfer is equal to the amount by which the post-1989 portion of the transfer exceeds the PAs of the previous benefits.

Modified method

Use this method when:

1. an individual goes directly from one DB provision to another, or
2. when a member terminates prior to January 1, 1997, and later re-establishes the same past service.

The formula is :

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A = A-B of Basic Method above

B = for members who terminated before 1997, non-vested PA amount, according to the formula (W - X) where:

W = recalculate the PA in the year of termination, without the old year of termination rule.

X = the old PA, with the year of termination rule applied.

C = money purchase transfer out of the old provision according to the formula (Y - Z) where:

Y = $ paid or transferred from old provision to RRSP, RRIF, MPP or SMEP (except $ not transferred yet to fund benefits by the new provision as they are waiting to receive confirmation of certification of the PSPA).

Z = The difference if any, between the old pension credits and the new credits. (i.e., old credits - new credits). Basically B-A of the Basic Method above.
The Z part merely allows the excess to be transferred to an RRSP without a negative impact.

D = qualifying transfers (same as for Basic Method above)