CEIFB Publishes 2011 Employment Insurance Premium Rate Setting Report

Canada Employment Insurance Financing Board Publishes 2011 Employment Insurance Premium Rate Setting Report

OTTAWA, Nov. 12 /CNW/ - The Canada Employment Insurance Financing Board (CEIFB) published its first annual Employment Insurance (EI) premium rate setting report today.  Along with the 2011 EI rates, the report includes forecasts for the upcoming year and cumulative deficits for the EI Operating Account.

The CEIFB Board of Directors has set the 2011 EI premium rate for residents of all provinces, with the exception of Quebec, at $1.78 per $100 of insurable earnings.  The EI premium rate for Quebec residents is set at $1.41.

The CEIFB Chief Actuary reports that the 2011 break-even rate for residents of all provinces with the exception of Quebec is forecast to be $2.68 per $100 of insurable earnings.  After applying the premium reduction for residents of a province with a provincial parental leave plan, the break-even rate for Quebec residents is forecast to be $2.31 per $100 of insurable earnings.

The EI program is expected to incur a deficit in the 2011 calendar year of $1.9 billion resulting in a cumulative deficit in the EI Operating Account of $10.4 billion as at December 31, 2011.

Background

CEIFB was established as a Crown corporation in 2008, operating at arm's length from the Government of Canada to improve the governance and management of EI financing by providing a stewardship role for the financing of the program.

According to David Brown, Chair of the CEIFB, the formation of this Board signalled a fundamental shift in not only how EI rates are set, but also how surpluses and deficits are managed and communicated. 

"For the first time, Canadians have full disclosure and access to information that details the decision-making process," Brown said. "Moreover, when the EI Operating Account is in a surplus position, we will hold and invest these surplus funds in a separate bank account, outside the funds of the Government of Canada. This will ensure that EI premiums are only used to pay for the EI program."

"Canadians can see first-hand the information from the Chief Actuary report that was used to set the EI rate and understand more clearly the financial position of the EI Operating Account," said Phil Charko, Executive Director of the CEIFB.

The Board of Directors of the CEIFB is required to set the premium rate based on a detailed analysis of the break-even rate provided by the Chief Actuary and in accordance with certain legislated limits on the annual maximum increase or decrease in EI premium rates.  The objective is to ensure that Canadians pay the right premium rates - just sufficient to cover the costs of benefits - while limiting any negative impacts on the Canadian economy.

On September 30, 2010, the Government announced its intention to limit the increase of the EI premium rate to 5 cents in 2011 and 10 cents in subsequent years.  These new maximum variation levels were enacted on October 28, 2010.

About the Canada Employment Insurance Financing Board

The Canada Employment Insurance Financing Board is a Crown corporation established in 2008 by the CEIFB Act. It reports to Parliament through the Minister of Human Resources and Skills Development.

The CEIFB is managed by a representative board of seven independent directors, including a chairperson, with the necessary skills and expertise to effectively carry out the organization's mandate. The Board of Directors is appointed by the Governor in Council, on the recommendation of the Minister of Human Resources and Skills Development from a list of nominees established by an independent nominating committee.

The CEIFB is responsible for:

• Setting the EI premium rate for the upcoming year in a transparent fashion,
• Managing any surplus EI premium funds for the benefit of the EI program,
• Reporting publicly on the financing status of the EI program, and;
• Once established, maintaining a $2 billion reserve to help ensure stability of the premium rate.

For more information on the CEIFB and copies of the reports of the Board of Directors and the Chief Actuary, please visit www.ceifb-ofaec.ca.