Canada Employment Insurance Commission

Canada Employment Insurance Commission

November 14, 2008 09:59 ET

Canada Employment Insurance Commission Sets Employment Insurance Premium Rate for 2009

GATINEAU, QUEBEC--(Marketwire - Nov. 14, 2008) - Acting under legislative authority introduced in 2005 that gives the Canada Employment Insurance (EI) Commission the authority to set the EI premium rate, the EI Commission today announced the 2009 premium rate.

As of January 1, 2009, the employee rate per $100 of insurable earnings will be $1.73, maintaining its current level. The corresponding employer rate is 1.4 times the employee rate.

The EI Commission sets the premium rate taking into account the principle that it should generate just enough revenue to cover payments expected to be made during the coming year. As prescribed in legislation, the rate is set based on economic forecasts provided by the Minister of Finance on or before September 30 of each year, the Chief Actuary's report and public input. As such, the proposed 2009 rate does not reflect recent changes arising from the deteriorating and rapidly evolving global economic situation and events after September 30, 2008. While the Government has the authority to substitute a new rate for that set by the Commission and is in a position to take into account more recent forecasts, the Commission notes that public input received from organizations representing employers and employees was unanimously of the view that the current rate should not be increased under current economic conditions.

The Maximum Insurable Earnings (MIE) will rise from $41,100 to $42,300 for 2009, according to the formula prescribed by the Employment Insurance Act and described in the Chief Actuary's Report. The MIE represents the ceiling up to which EI premiums are collected and therefore is also the maximum amount considered in an application for EI benefits.

For 2009, the maximum amount a worker earning the Maximum Insurable Earnings or more would contribute for that year would be $731.79 (an increase of $20.76 from 2008). The maximum amount an employer would contribute related to each employee earning the MIE or more would be $1024.51 (an increase of $29.07 from 2008). Because EI benefits replace 55 per cent of a claimant's average weekly insurable earnings, up to the Maximum Insurable Earnings, the maximum amount of EI benefits payable also increases to $447 per week from $435 in 2008.

The EI premium rate for Quebec will be $1.38 for employees and 1.4 times the employee rate for employers. Starting in January 2006, Quebec began offering its own parental benefits, resulting in savings for the EI program and giving rise to a rate that is different from that for the rest of Canada. This means that in Quebec, the maximum amount a worker earning the Maximum Insurable Earnings or more would contribute for that year would be $583.74 (an increase of $12.45 from 2008), and the employer would contribute 1.4 times the employee's premiums to a maximum of $817.24 (an increase of $17.43 from 2008). With the increase in the MIE, the weekly EI benefits payable increases as in the rest of Canada.

In Budget 2008, the Government implemented changes to the governance and management of the EI Account by creating the Canada Employment Insurance Financing Board (CEIFB). The CEIFB will be responsible for implementing a new EI premium rate-setting mechanism and setting the EI premium rate for 2010.

To learn more about the CEIFB (http://www.hrsdc.gc.ca/en/employment/ei/ceifb/index.shtml) or the EI Commission (http://www.hrsdc.gc.ca/en/employment/ei/ceic/index.shtml), visit Human Resources and Skills Development Canada's Web site at www.hrsdc.gc.ca.

The attached backgrounder provides further details on the EI premium rate setting.


BACKGROUNDER

Role of the Canada Employment Insurance Commission and the Employment Insurance premium rate-setting process

The Employment Insurance (EI) Commission is a tripartite organization with representation from business, labour and the Government of Canada that has a number of responsibilities pertaining to the delivery and administration of the EI program.

The Commissioner for Workers and the Commissioner for Employers are appointed by the Governor in Council for terms of up to five years. They are mandated to represent and reflect the views of their respective constituencies. Accordingly, both Commissioners develop and maintain consultative mechanisms to ensure that they fulfill this mandate. The Commission's chair and vice-chair positions are held by the Deputy Minister and Associate Deputy Minister of Human Resources and Skills Development Canada, and represent the interests of the Government of Canada on issues brought before the Commission.

Under the premium rate-setting mechanism introduced in 2005, the EI Commission has the legislative authority to set the EI premium rate. On October 14, 2008 (link to press release - http://news.gc.ca/web/view/en/index.jsp?articleid equals 421509), the Commission made public the Chief Actuary's Report as a first step in the 2009 rate-setting process. The legislative authority requires the EI Commission to set the rate by November 14.

In determining the rate, the EI Commission took the following into account:

- the principle that the premium rate should generate just enough premium revenue during the year to cover the payments expected to be made during 2009;

- the Chief Actuary's Report (http://www.hrsdc.gc.ca/en/employment/ei/premium_rate/2009/index.shtml); and

- public input.

To ensure premium rate stability and limit any negative impact on the business cycle, the maximum yearly change in the employee premium rate is limited to 15 cents per $100 of insurable earnings. This equates to a maximum shift of the employer premium of 21 cents per $100 of insurable earnings, as employers contribute 1.4 times the employee premium.

Under the current rate-setting process, the Chief Actuary is required to annually calculate, on a forward-looking basis, the estimated break-even rate for the coming year based on the most current forecast values of the relevant economic variables provided by the Minister of Finance on or before September 30 of the given year. The forward-looking basis means that surpluses, deficits and the notional interest credited to the EI Account do not enter into the calculation of the break-even premium rate. The Chief Actuary also calculates the Maximum Insurable Earnings for the coming year based on average weekly earnings and in accordance with the formula prescribed in the Employment Insurance Act.

If it is in the public interest to do so, the Government of Canada has the authority to substitute a new rate within the 15 cent-limit specified in the legislation, through an Order in Council issued no later than November 30.

The Canada Employment Insurance Financing Board will be responsible for implementing a new EI premium rate-setting mechanism and setting the EI premium rate for 2010.

This news release is available in alternative formats upon request.

Contact Information

  • Human Resources and Skills Development Canada
    Media Relations Office
    819-994-5559