Hi Vikram,
There are basically 2 retro dates,
1.Earliest retro accounting period which is applicable to whole payroll area in t-code PA03.
2.Earliest personnel retro active date which only for individual Employee's in (IT0003/PU03).
You are getting that error because your PA03 retro date is not in Oct-2012 so it will not allow you to change in PU03 as well.Make sure It should not be before his hiring date.
regards,
Narendra