Pensions, Vacation Pay and Other Money While on EI

The one question that decides it: is the money connected to a job?

EI only replaces lost earnings, so Service Canada looks at every payment you receive during a claim and asks whether it comes from employment. If it does, it's treated as earnings, counted before deductions, and placed into specific weeks of your claim (EI calls this allocation). Earnings in a week lower what EI pays for that week, and enough of them can mean no payment at all for that week.

If the money has no link to a job (a government benefit based on age, a gift, an inheritance, a refund), it's ignored. Canada.ca keeps a full earnings chart for edge cases. The sections below group the most common payments the way that chart does.

Two things never change, whatever the money is: you declare it on your application or reports, and Service Canada decides how it's treated. Leaving something out because you think it doesn't count is how overpayments start.

Money that counts as earnings

One item worth knowing: an employer top-up during maternity or parental leave counts as earnings unless it's paid under a Supplemental Unemployment Benefit (SUB) plan approved by Service Canada. Ask your employer which kind yours is.

Money that doesn't reduce your EI

These have no direct link to a job, so canada.ca lists them as not earnings:

• Old Age Security and its supplements
• CPP or QPP disability pensions, and other disability pensions
• Survivor or dependant pensions, and veterans' pensions
• Your own RRSP or RRIF withdrawals, and the part of a pension that comes from your additional voluntary contributions or that was split to you on separation or divorce
• A private wage-loss plan you bought on your own (a group plan through work does count)
• Approved SUB plan payments, and strike or lockout pay
• Workers' compensation paid for medical treatment, rehabilitation or equipment, and full and final settlements
• Inheritances, lottery winnings, alimony, one-time relief grants, criminal injury compensation
• Income tax and GST refunds, jury or witness fees paid by a court, and retroactive salary increases

A pension paid out of a locked-in account counts once the annuity starts paying you; while the money sits in a LIRA or a locked-in RRSP, it isn't earnings yet.

Pensions: the rule that surprises early retirees

A pension from your work, including a CPP or QPP retirement pension, counts as earnings. Monthly pensions are turned into a weekly figure (monthly × 12 ÷ 52) and set against each week of your claim.

Example (2026): Dana, 62, draws a $1,560 monthly pension from her old employer and is laid off from a job she held before the pension started. Her pension equals $1,560 × 12 ÷ 52 = $360 a week of earnings in every week of her claim, which lowers what EI pays her. Service Canada works out the exact payment. If the same $1,560 were a survivor pension from her late spouse, it wouldn't affect her EI at all.

The requalifying exception: a pension stops counting if, after it started, you build up enough insured hours to qualify for a new claim, and the claim is based on those new hours. Canada.ca gives the example of a retiree who takes a new job, works enough hours with the new employer after the pension starts, and then claims on those hours: the pension isn't deducted. The hours you need depend on your region; see how many hours you need.

Lump sums are converted to a weekly amount using an age-based table (the 2026 table covers payments from December 28, 2025 to December 26, 2026). In Service Canada's own guidance, a $30,000 lump sum paid in July 2026 to a 56-year-old works out to $31.50 a week.

The temporary pause on separation money

Normally, vacation pay, severance and other money paid because you lost your job fill the weeks after your layoff at your usual weekly pay, and EI starts once that money is used up. For now, that rule is switched off:

Example: Lee is laid off in November 2026 and is paid $3,000 in vacation pay and $5,000 in severance. Because his claim starts inside the window, neither amount is deducted and his benefits aren't delayed. If an identical layoff led to a claim starting after October 9, 2027 and the measure isn't extended, the $8,000 would be allocated under the normal rules.

This is temporary. It covers only money paid because of the separation, not pensions, not workers' compensation, and not vacation pay tied to a scheduled vacation. The full rules and an example are in severance, vacation pay and EI, and the dates on canada.ca's temporary measures page are the ones that count.

How this fits with working while on EI

Pay from new work during your claim is handled separately: in 2026 you keep 50 cents of benefit for every dollar earned, up to 90% of the weekly insurable earnings your claim is based on (see working while on EI). Money from your old job, pensions and income-replacement payments are allocated to their own weeks as described above, so check the chart rather than assuming the 50-cent rule applies.

Everything that counts as earnings is also usually taxable, and so is EI; EI and taxes explains the 2026 repayment threshold. MyEI is an independent estimate tool, not affiliated with Service Canada. For your own file, call Service Canada at 1-800-206-7218.