Buying service and RRSP contribution room

You can buy service using a combination of cash and RRSP transfer. However, if you are transferring service from the pension plan of a previous employer or buying past service, and the resulting past service pension adjustment (PSPA) is greater than your available RRSP contribution room, you may have to make a qualifying withdrawal from your RRSP. A qualifying withdrawal is an amount you withdraw from your RRSP so that you can receive past service benefits.

In some cases, you may also make a qualifying transfer—a direct transfer of funds from your RRSP to the plan that does not affect your RRSP contribution room. If you’re buying past service from a former registered pension plan, direct transfers of funds from defined contribution or specified multi-employer pension plans are considered qualifying transfers.

The final PSPA amount can only be determined after we receive payment. In many cases, we then submit the PSPA to the Canada Revenue Agency (CRA). CRA will contact you in writing if you must make a qualifying withdrawal or qualifying transfer. If you decide not to make a qualifying withdrawal or qualifying transfer, you must notify both CRA and the College Pension Plan.

In some situations, CRA may allow you to over-contribute to your RRSP. If you are considering buying past service and do not have enough RRSP room available to do so, contact CRA to find out if you are eligible.

If your PSPA is not approved by CRA and you are not able to make a qualifying withdrawal or qualifying transfer, you cannot buy the past service.