Christian Schools International

Requirements for Pension Adjustments and Important T4 Slip Reporting Information

Canada Revenue Agency legislation requires each employer participating in the Canadian Christian School Pension Plan to report a Pension Adjustment (PA) for each employee who accrued benefits under the Plan during the previous calendar year. The PA must appear on the participant’s T4 slip, and an accompanying report must be filed by the last day of February following the taxation year.
As in prior years, a modification to Pension Adjustment calculations may need to be made for participants who work less than a full calendar year, including those who join the Pension Plan during the calendar year, those who separate from employment and those who work on less than a fulltime basis. The enclosed exhibits include information on which participants need a modification to the Pension Adjustment.
Reporting for 2007 is required by February 28, 2008, and is based on the pension accruals for calendar year 2007. The 2007 pension accrual is based on covered earnings paid in calendar year 2007. Accordingly, it is necessary for each participating Board (or its designate) to understand and complete the calculations and record keeping to ensure accurate reporting for 2007. The reported Pension Adjustment will reduce the participant’s overall personal RRSP contribution room dollar-for-dollar. It is therefore important that the necessary calculations be completed accurately.
To assist you in the calculations of PAs, we have enclosed the following exhibits:

I. Pension Adjustment Formula for the Canadian Christian School Pension Plan

II. Sample calculation 1

III. Sample calculation 2

IV. Sample calculation 3

V. Sample calculation 4

If you have any employees who received Short Term Disability or Long Term Disability benefits in 2007, include the period of disability in calculating the Pension Adjustment. The rate of earnings at the time of disability, not the amount of disability benefit, should be used in the calculation.

Please note the following

- The $600 offset in the formula still applies. Participants who transfer to/from a school that participates in the Canadian Christian School Pension Plan will have the $600 offset prorated. If the participant did not participate in the Plan at another school in 2007, the $600 offset should not be prorated. Participants who work less than fulltime will receive the full $600 offset unless they worked at a second school participating in the Plan during 2007. See the exhibits for more information.

- If a participant terminated employment during 2007 and was not entitled to a vested pension benefit from the Pension Plan (i.e. the participant completed less than 2 years of membership in the Plan), the Pension Adjustment for this participant must still be determined.

-The plan document has been amended to reflect the changes adopted in 2006. The plan formula is now 1.84% rather than 1.38%. Participants in the 4% plan receive one year of adjusted credited service for each year of credited service. Participants in the 3% plan receive 0.75 year of adjusted credited service for each year of credited service. Note that this amendment does not change either the benefit entitlement or the Pension Adjustment final value.

- In no event shall the Pension Adjustment reported be higher than $19,400 for 2007.

The Canadian Christian School Pension Plan registration number with Canada Revenue Agency (0283812) must also be printed on the T-4. Instructions as to where to print the PA and the Plan’s registration number on the T-4 are included in CRA’s employer’s guide that should be available from your local district tax office.

Since an historical record of Pension Adjustments must be kept, please send a listing to our office in February 2008 showing the name, social insurance number and 2007 Pension Adjustment amount for each participant on your 2007 payroll. This information will be used in the future to calculate Pension Adjustment Reversals and to determine if plan design and benefit changes comply with government regulations.

Full Issue: No. 168 - December 21, 2007

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