Employment insurance: Costly delays for some claimants

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In early April, he received about $ 10,000 from unemployment insurance. It was too late. He said he had to borrow money. Therefore, he notices unpaid interest and a decline in credit rating.

Mr. Sabino applied for unemployment insurance benefits after losing his job as a board member. He quickly gained his first profit and continued to look for his job.

Professional image of a man looking at the camera.

Olivier Sabino is a director and has lost his job in Toronto.

Photo: Olivier Sabino

In November, he accepted a $ 380 contract and declared that he had earned this income as a self-employed person.

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I thought I would get that amount back at the next performance, but it was normalSays Sabino.

However, his file was sent for review instead and he was informed that his profits would not be paid until the evaluation of his file was completed.

On his first call to Service Canada, he says he was informed that a delay of about three weeks was expected. Then he has to immerse himself in his savings.

However, there are a lot of delays.

To meet his needs, the director borrows from relatives and withdraws the investment Registered retirement savings plan Use his credit card.

In a written statement, a spokesman for the Ministry of Social Development and Employment said in certain cases of Mr. Sabino, The delay is due to fraudulent attempts (by a third party) that require identity verification, and the fact that the client has declared and processed the application for other amounts received in connection with self-employment. And more complicated admission decisions..

Sabino, who was a victim of credit card fraud a few years ago, says he worked with his financial institution to completely resolve the situation.

But he is not the only unemployment claimant waiting for his files to be processed.

In the most recent week when the ministry released the data, 52,810 claims have been filed since March 28, 2022. Of the requests received after September 27, 2020, 151,180 are still awaiting response.

Still, the ministry says it is currently beyond the goal of application processing.

“” The service standard for payment of benefits is to send a notice of payment or non-payment within 28 days of filing the claim in 80% of cases. From April 1, 2021 to March 31, 2022, Service Canada exceeded its target by 85.4%. »»

— — Quote from Statement from the Ministry of Social Development and Employment

However, the ministry recognizes that more complex requests can require delays of more than 6 weeks.

Prepare for the worst

Mr. Sabino said he had saved money Small pillowBut he never thought he needed to maintain his savings to support himself for a long time.

Financial adviser Richard Tétrault advises clients to maintain savings of 3 to 6 months, which is easily accessible during difficult times, if possible.

According to him, Liquidity is a problem many Canadians have..He has people who regularly contribute to registered retirement savings plans Registered retirement savings plan) Instead, deposit some of these amounts in a more easily accessible savings account, such as a tax-exempt savings account. Duty Free Savings Account ..

However, if urgent financial needs exceed available savings, Groupe financier Tétrault’s portfolio manager advises not to withdraw. Registered retirement savings plan Only as a last resort.

Instead, he first asks his relatives for a temporary loan, then asks a financial institution for a low interest rate loan, and proposes to use a temporarily available credit card before withdrawing money.

“” the Registered retirement savings planYou will pay your marginal tax rate as soon as you take it out, so it should be your last choice. »»

— — Quote from Richard Tétrault, Portfolio Manager, Tétrault Financial Group

Sabino had to use all these strategies to support himself for four and a half months.

After he receives the entitled unemployment insurance payment, he finds that he still has an accumulated interest invoice.

In addition, his credit rating is Excellent To very good..

The credit-to-debt ratio available is a decisive factor in establishing an individual’s credit rating.

Sabino is currently worried that this devaluation of credit could jeopardize future borrowing projects. He also hesitates in the future before accepting contracts that can complicate claiming benefits, even if it is this type of contact that can lead to employment in his industry. I will point out.