RRSP Savings and Pension Adjustment

Question:

Why are allowable RRSP contributions so low if the earnings are high enough to contribute the maximum amount?

Answer:

Low RRSP contributions for persons earning substantial money. may occur if there is an ongoing defined benefit pension plan. Note that you entered a defined benefit pension for your client, and the system estimates a pension adjustment, which reduces the RRSP contribution room.

If your client is not currently accruing a defined benefit pension, then you should enter this amount as a "defined benefit pension from a former employer" and this will cause no future pension accruals and no pension adjustments.