Confused About CERB Ending? 3 Things You Need to Know About EI

CERB is over and the transition to EI is underway. Canadians shouldn’t worry about applying because the system is simplified. For income-investors, the Canadian Imperial Bank of Commerce stock offers a generous dividend.

| More on:
You Should Know This

Image source: Getty Images

The federal government had to introduce the Canada Emergency Response Benefit (CERB) in March 2020 because the Employment Insurance (EI) system was choking from the massive volume of claimants. During the weeks of spring and summer, the EI system was undergoing technical upgrades.

The plan was for EI to take over releasing income support to jobless Canadians when CERB finally expires. About 75% of CERB recipients still need financial help. Employment Minister Carla Qualtrough, however, is confident the system will not break. The transition to EI should be seamless as the country enters the recovery phase.

Despite the minister’s assurance, many are confused about the original pandemic lifeline ending in September. There are temporary changes to the EI that people should know to allay the apprehensions.

1. Automatic transition

For Canadians who applied for and received CERB through Service Canada, the transition to EI is automatic. Service Canada will contact EI clients to advise them or confirm whether they need to apply. You can also check your claim status at My Service Canada Account.

If you received your CERB from the Canada Revenue Agency (CRA), you need to apply for EI through Service Canada. A self-employed individual or a person with 900-series Social Insurance Number (SIN) receiving the benefit must also apply.

2. Reduced insurable hours

As a temporary measure, a claimant needs to have 120 insurable hours only. If you’re claiming EI regular benefits due to job loss, you will receive one-time insurable hours of 300. For EI special benefits (sickness, maternity/parental, compassionate care or family caregiver), the one-time credit is 480 insurable hours.

3. Benefit is equivalent CERB

Whether it’s an automatic transition or new application, an individual claimant will receive a taxable benefit of $500 per week (same amount as CERB) for at least 26 weeks. This time, the difference is that you can also work while on a claim, up to $38,000 maximum per year.

Dividend investing

Canadians with financial flexibility can earn extra or build an emergency fund through dividend investing. You can buy blue-chip stocks to receive regular, if not permanent, income. Canadian banks are known value creators and the Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) belongs to this elite group.

The fifth-largest bank in Canada is a generous dividend payer. You can purchase the bank stock and delight in a 5.7% dividend. Assuming you can $421,250 worth of CIBC shares, the monthly dividend is $2,000.94. It’s like receiving monthly CERB or EI on an unlimited basis.

CIBC is more home country-centric than its industry peers but should be expanding, especially in the U.S. markets. Performance-wise, this bank stock has rebounded from its COVID-low. The price sunk to $67.65 on March 12, 2020, but is currently trading at $101.60 (+50%).

The most important consideration is that CIBC is a Dividend Aristocrat. This $45.23 billion financial position has a dividend track record of 152 years. It’s a mean feat because the bank endured recessions and economic downturns.

Much-improved EI

The new EI is nearly the same as CERB. Claimants shouldn’t worry about complicated criteria and application lag times. The changes reduce these risks and, at the same, ensure the system won’t be overwhelmed.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »