Discuss CSI IFC Exam Topic 5 Question 10

Which of the following statements about pension adjustments (PA) is TRUE?

AThey represent how much your pension is reduced due to market conditions.

BThey increase your registered retirement savings plan (RRSP) room by the amount of the pension adjustment.

CThey represent how much your pension will increase due to years of service.

DYou will receive a PA whether you are in a defined contribution or a defined benefit pension plan.

Suggested Answer: D

A pension adjustment (PA) is the amount that the Canada Revenue Agency (CRA) assigns to your pension plan each year to reflect the value of the pension benefits that you earned. The PA reduces your registered retirement savings plan (RRSP) contribution room for the following year by the same amount. The PA ensures that all taxpayers have access to comparable tax assistance, regardless of the type of pension plan they participate in. You will receive a PA whether you are in a defined contribution or a defined benefit pension plan, but the calculation of the PA will differ depending on the type of plan. (Canadian Investment Funds Course, Chapter 8, Section 8.2)

Canadian Investment Funds Course, Chapter 8, Section 8.2: Retirement Savings Plans and Pension Plans

Investopedia: Pension Adjustment: Definition and Types of Plans1

PlanEasy: What Is A Pension Adjustment?2

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22 comments · newest first

Raina 2 days ago

Agreed! D makes the most sense.

Crista 7 days ago

I think option D is correct. PAs apply to both plans.

Anastacia 12 days ago

True, but A is misleading. It’s not just about market conditions.

Latia 18 days ago

I feel confused about A. Market conditions do affect pensions, right?

Casie 23 days ago

But B isn’t accurate. PAs don’t increase RRSP room.

Renea 28 days ago

I’m leaning towards B. More RRSP room sounds good!

Paris 1 month ago

Agreed! D makes the most sense.

Carmelina 1 month ago

I think option D is true. PAs apply to both plans.

Frederic 1 month ago

C is misleading; it's not just about years of service.

Layla 2 months ago

Wait, are you saying PAs apply to both types of plans? Really?

Brandee 2 months ago

D is the correct one, for sure.

Beth 2 months ago

B sounds right to me!

Fallon 2 months ago

A is definitely not true.

Iluminada 2 months ago

Wait, you get a PA in both plans? That seems odd!

Fabiola 2 months ago

C sounds off, it's not just about years of service.

Cyril 3 months ago

I thought D was the right answer, but I'm not so sure now.

Shannon 3 months ago

B is true! PAs do increase your RRSP room.

Timothy 3 months ago

A is definitely wrong, it's not about market conditions.

Quentin 3 months ago

I remember discussing how years of service affect pensions, but I’m not sure if that relates to PA. I might lean towards option D, though.

Cheryll 3 months ago

I’m a bit confused about option A. I thought pension adjustments were more about contributions rather than market conditions.

Iola 4 months ago

I feel like I’ve seen a question about pension adjustments before, and I think it was about how they relate to defined benefit plans. Maybe option D is correct?

Beckie 5 months ago

I think option B sounds familiar, but I'm not entirely sure if it’s the right answer. I remember something about RRSP room adjustments.

CSI IFC Exam - Topic 5 Question 10 Discussion