Each year since 1990, a member's employer has calculated the estimated value of the lifetime OMERS pension the member earned according to a formula established by the Canada Revenue Agency. The estimated value is called a Pension Adjustment (PA) and is reported by the employer each year on each member's T4. Canada Revenue Agency deducts the PA from the member's available RRSP room.
If a member purchases any Supplemental Plan service related to the 2.33% accrual rate benefit and the service occurred after December 31, 1989, OMERS will calculate a PA for the past service and report it to the CRA. This is called a PSPA (past service pension adjustment).
A PSPA is reported for past service purchases related to the 2.33% accrual rate Supplemental Plan benefit only. A PSPA is not reported for past service purchases related to the 80/85 Factor, “best three” earnings, and “best four” Supplemental Plan benefits.
The CRA will subtract the PSPA from the member's available RRSP contribution room, and will not allow the member to purchase service if the member does not have enough room for the PSPA.
Paying for a past service purchase by RRSP reduces the PSPA reported to the CRA. PSPAs less than $50 don't need CRA approval.
The CRA may allow a member to exceed their available RRSP room by $8,000 leaving the member with a negative RRSP deduction limit. In this case, the member will not be able to make any RRSP contributions until their current (and possibly future) earnings restore their RRSP room to a positive value.
If a PSPA can't be approved, the CRA will send the member forms and instructions. The member can make a "qualifying withdrawal" or a "qualifying transfer" of RRSP money to create more RRSP room. The member can also decide to purchase less service, or none at all.
Supplemental Plan benefits are not automatically provided. Employers can set up Supplemental Plan coverage for a class or classes of members in the police sector, firefighters and paramedics.