Employees may choose to have termination earnings, such as severance pay, which are payable on separation, sent directly to a financial institution to purchase a regular RRSP, or a non-commutable and locked-in RRSP. Whether the claimant accepts a cheque and deposits it into a savings account; accepts a cheque and purchases a RRSP; or has the employer purchase the RRSP, the result is the same for EI purposes.

The termination earnings are considered paid or payable by reason of the lay-off or separation and are allocated from the date of whichever event gave right to the money. Purchasing a RRSP does not alter the nature of the earnings, nor the fact that the earnings were immediately due and therefore considered paid or payable. The critical factors are the reason for the payments and the fact it was paid or payable, not the use to which the employee chooses to put it.

The same is true when employees choose to have all or part of their severance or other termination pay deposited directly into their pension plan in order to purchase additional pension credits and enhance their pension entitlement. The choice to use one benefit (severance pay), to improve another (pension), does not alter the nature of the severance pay, nor the fact that it was paid or payable.