Taxes and your pension - Provincial Judges Pension Plan

As you prepare for retirement, it’s important to remember that your pension is considered taxable income. This means OPB (on behalf of the PJPB) is required to deduct tax from your pension payments. Although your pension is paid as one payment from three sources – the Registered Pension Plan (RPP), the Retirement Compensation Arrangement (RCA) and the Supplemental Pension Plan (SUP) – tax is deducted based on the sum paid to you.

The amount of tax deducted from your monthly payment will be based on:

the government tax tables for the province you live in; or
if living outside Canada, the tax table for that country; and
any personal tax-related information provided to OPB on behalf of the PJPB.

These amounts will be reported in two slips: the RPP and SUP amount on your T4A and your RCA on your T4A RCA.

Income Tax Act limits – while you are still working

The Income Tax Act (ITA) limits the amount of pension you can earn each year in a defined benefit pension plan, such as the PJPP.

Contributions to the RPP deducted from your salary must be reported on your T4 slips each year. Your contributions to the RCA account will be reported separately in a letter provided by PBOB. As you do not contribute to the SUP, you do not receive any tax slips related to this fund.

Because of your earnings level, you will exceed the RPP contribution limit, which is likely less than the plan’s contributions rate of 7% of your full salary. The difference is deposited into the RCA. Visit the Contributions and plan funding page to learn more about how your contributions are remitted to the plan. For further information on tax planning, you may also consider speaking to a licensed tax advisor.

For information about taxable income once you’ve retired, visit the Managing your taxes page.

Pension income splitting

For tax-reporting purposes, up to 50% of eligible pension income may be allocated to a spouse, with the spouse’s consent. This is known as pension income splitting.

Eligible pension income that qualifies for splitting includes the part of your pension paid from the RPP component of the PJPP. At age 65, eligible pension income will also include the part of your pension paid from the RCA component, subject to an overall eligible income limit allowed under the ITA.

Pension income splitting does not affect the payment of your pension but can reduce the amount of income tax you pay. No funds are transferred; you simply allocate income to the tax return of your spouse and complete a T1032 Joint Election to Split Pension Income form(opens in a new tab).

Keep in mind that not all retirement income qualifies for pension income splitting, so it is important to get professional advice from a licensed tax advisor if you intend to use this tax strategy.