Your Pension, AVCs and RRSP room

The amount you can contribute to your RRSP in any year – your RRSP “room” – is calculated as follows:

Pension Adjustment (PA) – The PA puts a value on the benefit you earned in OMERS for the year and it reduces the amount you can contribute to RRSPs in the following year. So, your 2017 PA reduces your available RRSP room in 2018. Your employer reports your PA in Box 20 of your T4 tax slip.

AVC automatic contributions – Like your PA, AVC automatic contributions reduce the amount you can contribute to RRSPs in the following year. AVC automatic contributions are made by pre-authorized debit or employer payroll deductions. Employer payroll deductions are included in the PA in Box 20 of your T4 tax slip. Funds coming into an AVC account from a registered retirement vehicle (e.g., RRSP) are already tax sheltered and don’t affect RRSP room.

Example 1 – RRSP room

About the OMERS member:

  • 18% of 2017 income: $13,000
  • Unused room carried forward from previous years: $0
  • PA on the 2017 T4 slip: $10,000
  • Contributions to AVCs by pre-authorized debit in 2017: $2,000

The member’s RRSP room is calculated as follows:

OMERS AVC Automatic Contribution Limits – To reduce the likelihood of members over-contributing to an RRSP, we’ve established automatic contribution limits. These limits are based on earnings and credited service and take into account the PA rules. For more on how the limits work, see page 10 the AVC Guide. The limit does not apply to transfers from a registered retirement vehicle because the funds are already tax sheltered – i.e., there is no minimum or maximum for fund transfers to an AVC account.

See the currrent AVC automatic contribution limits

Example 2: The Bigger Picture (Year-Over-Year)

Another member begins making AVC automatic contributions in 2017 and wants to contribute up to the AVC limit. The member’s available RRSP room for 2017 is $4,000 after accounting for OMERS PA from the previous year. In 2017, the member can make $4,000 in RRSP contributions (in addition to any unused room carried forward from previous years) plus $3,000 in AVC contributions, which is the automatic contribution limit based on the member’s earnings and credited service, for a total tax-deductible contribution of $7,000.

In 2018, the member’s available RRSP room is $1,000 after accounting for OMERS PA and AVC automatic contributions from the previous year. The member can make $1,000 in RRSP contributions (again, in addition to any unused room carried forward from previous years) plus $3,000 in AVC contributions for a total tax-deductible contribution of $4,000 for 2018.

18% of annual income PA on T4 tax slip AVC automatic contribution limit for current year Available RRSP room
for following year –
after OMERS PA & AVCs
RRSP room (max. RRSPs in current year) Max. RRSPs and AVCs in current year
2016 $16,000 $12,000 $16,000 – $12,000 = $4,000
In 2017, the member begins making AVC contributions by pre-authorized debit and contributes up to the AVC limit.
2017 $17,000 $13,000 $3,000 $17,000 –
(13,000 + $3,000) = $1,000
$4,000 $3,000 + $4,000 = $7,000
2018 $18,000 $14,000 $3,000 $18,000 –
($14,000 + $3,000) = $1,000
$1,000 $3,000 + $1,000 = $4,000

Note: All figures are for illustrative purposes only