There are all kinds of advisory practices in Canada. High-end fee-only offices; agricultural-focused practices; some manage group pension plans. But one small practice seems to be a one-of-a-kind in this country—D.R. Pensions Consulting, a Comox valley based business that is the place to go for anyone looking for answers on complex questions about Canadian Pension Plan benefits.
The principal of the firm, Doug Runchey, spent three decades working at the CPP and Old Age Security. He learned the ins-and-outs of the arcane rule-bound programs. When he retired to Vancouver Island he set up the spreadsheets that allow him to work through the various steps to determine what someone is owed by the government in their old age. His deep experience is often tapped by advisors looking for someone to untangle the mysteries of CPP.
Applying for to the plan is, of course, a rite of passage for older Canadians. Every Canadian can claim CPP. But each case is unique. Only by doing the actual math will you know what you're getting. Runchey typically gets requests to work out the math around two basic questions:
- Should separated or divorced couples take advantage of CPP credit-splitting?
- In what year between 60 and 70 should a person take CPP?
The answers to these questions will depend on years worked and at what pay, so they vary. Making sure your client is getting the best “deal” they can from CPP will only emerge once the numbers are crunched in each individual case.
Those wondering what their CPP cheque might be can request a so-called statement of contributions (SOC), which will contain an estimate of what that person might get from the plan when they formally apply. It takes about three months to get the document. But remember, this is just an estimate, not a formal notice of what the retiree will actually receive. The final CPP application could be different. “Sometimes the SOC is quite accurate....others times it is drastically high or low. It's not a bad document. But you have to know what to look for. You have to be aware. People looking at the SOC could receive more or less. Sometimes that is not very well explained. Use the SOC as a start," says Runchey.
Another common request is an audit of CPP numbers. The government is good with getting the calculations right. But there is a common mistake in cases when people work up to the year they apply for CPP. Benefits are calculated on wages earned minus a deduction of a certain number of years of “lowest pay." When people work up to the year they apply, that final year--typically the year of highest pay--is often missed. “Fifty percent of people who work to the year they apply for CPP are being underpaid,” says Runchey. "Service Canada used to routinely adjust claims up or down based on various factors....today they need to be prodded. Make sure what getting is what you are supposed to be getting.”