The Canada Emergency Response Benefit (CERB) is nearing its end, as the country moves to the recovery phase. There will be no encore, according to Employment Minister Carla Qualtrough. The federal government will be moving as many Canadians as possible onto Employment Insurance (EI) starting September 2020.
Statistics from the Canada Revenue Agency (CRA) shows that total CERB payments have reached $62.75 billion as of July 26, 2020, with 8.46 million unique applications. However, out of the amount, $442 million was paid by mistake, and 221,320 Canadians received double CERB payments.
The number of people scrambling to receive income support in mid-March was in the millions. In the first two days alone, there were 1.7 million COVID-19 relief benefit applications. CERB’s creation to unclog the flooding EI system. But due to confusion and panic, people were applying with the CRA and Service Canada.
When the dust settled, the guidelines became clearer. You must file your CERB with either the CRA or Service Canada, not both. During the program’s early days, many filed double applications. The same people are mostly the recipients of the said double payments. Hence, the CERB payments came out to be $4,000 monthly instead of $2,000.
Rectifying the error
The CRA and Service Canada realized the inadvertent payments. Both promptly conducted validation checks for the second round of CERB payments on April 13, 2020. The CERB administrators ensure that no claimant will receive more than the maximum allowable taxable benefit of $12,000 after the 24 weeks.
A spokesperson from the office of the Minister of National Revenue confirms that nearly half a million of ineligible or double-payment recipients made voluntary repayments to the CRA. Efforts to rectify the error and collect the excess payments are ongoing. Meanwhile, Canadians who are still out of work in July are applying for the CERB extension.
Make it permanent
Canadians who have excess financial resources can create a CERB-like income that is perpetual. Genworth MI (TSX:MIC), the largest private residential mortgage insurer in Canada, is ideal for long-term investors. The stock price of $33.19 is 35% cheaper than its 2019 year-end price, but the dividend yield is a high 6.35%.
To illustrate, $75,000 worth of Genworth shares can produce a passive income of nearly $4,762.50. The dividend earnings translate to a quarterly income stream of $1,190.62. Likewise, the payments are safe, as management keeps the payout ratio in check (less than 50%). After 20 years, your investment would be worth $256,927.83.
The Oakville, Canada-based insurer has been operating for 25 years. This $2.86 billion company is widely known for providing mortgage default insurance. Canadian residential mortgage lenders in Canada form their customer base. In Q1 2020, the impact of COVID-19 was slight, although the net operating income of $117 million was 1% lower than Q1 2019.
21st Century EI
The pandemic lifeline is winding down, not because the health crisis is over. Instead, the migration of CERB recipients will happen in September. Prime Minister Justin Trudeau promises anew that no one will be left behind with the transition to the 21st century EI. The parallel benefit should cover everyone looking for work.
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Fool contributor Christopher Liew has no position in any of the stocks mentioned.