Also popular: Picture of a practice: D. R. Pensions Consulting

Questions about the Canada Pension Plan? This firm has thirty years experience working out the math on the government program.

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 they need to be prodded. Make sure what getting is what you are supposed to be getting.”
Also important to consider are females who dropped out of the workforce to have a child. “If they've taken time off to have a family...females can drop out more years from the calculation, which can see their CPP cheque bumped up. But the SOC wouldn't take that into account. The document might show a lower amount of money than what you are entitled to,” says Runchey.

Another typical concern is around credit splitting between married couples. “Sometimes this is good, sometimes this is bad,” he says. Predicting impact of credit splitting can only be based on the actual individual cases. To know whether this would be a benefit is, again, a matter of doing the math.

Also common are questions from self-employed people. Some think it makes sense to not make contributions to the CPP and instead put that money in an RRSP where the money can be taken out as a dividend payment. Because dividends are taxed lower than income (which CPP is considered) there is a saving. "There are many more in small business today and have ability to choose how they pay themselves,” says Runchey. But again, this is a complex question that is only answered once the individual case is considered.

There is also a question about when to begin getting CPP. Should one claim CPP early, or wait until later? Waiting until 70 to draw on CPP can see an individual receive 42% more on their cheque. But recent changes around those who work post-retirement have shifted the answer to this question says Runchey, “Overall, the organization does a good job of crunching the numbers. But there are a couple of hidden details someone should be aware of. Each case is different. You don’t know until you do the calculations.”  

In fact, the government began introducing a slate of rule changes to CPP in 2012. These new rules will be fully implemented by 2016, and should bulk up benefits, which the government is hoping to do. It turns out not many Canadians have saved enough for retirement.  According to Runchey, “the take up on RRSPs was not what the government expected. People are living for today and are not saving. Which is why the provinces are looking at this.” The decision by Ontario to create a new provincial pension plan is an example of the worry among politicians.  

Runchey is, himself, semi-retired. He typically works with two clients a day. “The rest of the day I work on life." He also contributes to several Canadian financial forums and writes pension-related articles for the website (run by the popular Edmonton-based advisor Jim Yih). Baby boomers are his biggest client segment, though he does get some keen 40-year olds asking wondering they can retire. “I'll run the numbers for a forty year old…but I tell them they are not very meaningful. Who knows what will have changed by then.” One sixth of his clients come from financial planners. If an advisor sends enough business he will take the time to train them on the details of what they need to tell their clients to send over. If an advisor sends him one client a month he offers a 20% discount on rates. "As far as I know, I am one of a kind," says Runchey. His work can be done online now. So his client base is across the country and around the world in the case of Canadians living abroad.  

You can find D. R. Pensions Consulting at