The Canada Employment Insurance Financing Board Publishes its 2013 Employment Insurance Premium Rate Report

OTTAWA, Sept. 14, 2012 – The Canada Employment Insurance Financing Board (CEIFB) published its Employment Insurance (EI) premium rate report for 2013 today.

“2012 marks a turning point in EI financing” states David Brown Chair of the CEIFB. “The balance in the EI Operating Account has turned around and the cumulative deficit is firmly on a downward path. The reduction is estimated at $1.3 billion for 2013”.

Key information in the report includes:

  • In 2013, EI revenues are expected to exceed program costs by $1.3 billion, and the EI Operating Account deficit is expected to be reduced to $7.6 billion. EI premium revenues are forecast at $21.7 billion, while expenditures are forecast to be $20.4 billion.
  • The Board of Directors has set the 2013 EI premium rate for residents of all provinces and territories, with the exception of Quebec, at $1.88 per $100 of insurable earnings an increase of five cents from 2012. The EI premium rate for Quebec residents is set at $1.52 per $100 of insurable earnings, an increase of five cents from 2012.
  • Economic Action Plan 2012 measures related to EI financing will improve the stability and predictability of EI premium rates. These measures will also limit the tendency to create significant deficits and surpluses in the EI Operating Account.

Mr. Brown welcomed changes to the EI rate setting mechanism announced in Economic Action Plan 2012: “We believe that the new seven year horizon break-even rate, once it will be implemented, will improve the stability and predictability of the EI premium rates. Moreover, the publication of the upcoming year EI premium rate in September rather than November will leave more time for businesses and individuals to get ready.”

The 2013 Premium Rate Report contains more historical data and the analytic sections of the Report have been expanded. “This year the Report includes a section on key drivers of the EI Operating Account balance”, says Phil Charko, Executive Director of the CEIFB. The report notes that there has been a significant decline in net expenditures for the EI program since 2009, from $23 billion to a projected $20.4 billion in 2013. A key driver in this decline is the reduction in the number of unemployed which has dropped 9.7% since 2009 from 1,519,000 to a forecast 1,372,000 in 2013.

About the Canada Employment Insurance Financing Board

The Canada Employment Insurance Financing Board was established as a Crown Corporation in 2008 by the CEIFB Act. The CEIFB ensures that Canadians can have confidence that they pay the right EI premiums to cover the costs of the program and that premiums are used exclusively for the benefit of the program. Excess premium revenues will be invested by the CEIFB independent of the government until they can be returned to premium payers through lower premiums. The CEIFB reports to Parliament through the Minister of Human Resources and Skills Development.

The CEIFB is overseen by a board of seven directors, including a chairperson, with proven financial ability and experience. 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 financial analysis done by the CEIFB is performed by a team of actuaries adhering to professional standards. Among its activities is the detailed calculation of the premium rate that would allow the EI Operating Account to break-even based on forecast earnings and expenditures. As well, the Chief Actuary performs analyses for the Canada Employment Insurance Commission. These include the calculation of the premium reduction for provinces with maternity, parental and adoption benefits, the premium reduction for employers with wage-loss plans and the maximum insurable earnings amount.

The Canada Employment Insurance Financing Board (CEIFB) was created as a Crown Corporation in 2008 to ensure that EI premiums are used exclusively for the EI program. This followed extensive public discussion on the need to improve the transparency and independence of EI financing. Through professional stewardship, the CEIFB ensures that EI premiums are set so that revenues and expenditures break-even over time.

Over the past few years however, the rate setting mechanism together with the cumulative deficit which had been built up, would have resulted in large and steady increases in EI premiums at a time of fragile recovery. The rate setting mechanism would have led to pro-cyclical impacts that would have impeded the recovery. Thus, on September 30, 2010, to address this challenge, the Government announced changes to limit the increase in EI premiums to five cents for 2011 and, that a public consultation would be initiated. The purpose of the consultation was to build on the improvements introduced in 2008 in order to achieve greater stability and predictability in the rate setting mechanism and mitigate its pro-cyclical impacts.

The results of these consultations, announced in Economic Action Plan 2012, will lead to more stable and predictable premium rates. The rate setting mechanism has been adjusted by first, limiting to five cents the annual variation in premiums for future years, and second, setting rates on the basis of a seven year time horizon, once the EI Operating Account is in balance.

Another change introduced in Economic Action Plan 2012 is that the obligation to maintain an indexed reserve has been repealed. The CEIFB will no longer be required to increase the premiums above the cost of the program to maintain a reserve. The experience of recent years has demonstrated that there is no need for such a reserve. During this period, deficits of the EI program were financed by the government at no additional cost to employers and employees, as though there was a zero-interest line of credit available to the EI program. In addition, direct Government contributions to the EI Operating Account over this period amounted $3.2 billion.

According to Phil Charko, Executive Director of the CEIFB, with these changes, the employment insurance program is moving closer to truly break-even financing whereby the CEIFB Board will endeavour to keep the EI Operating Account close to a zero balance. One of the implications is that the CEIFB investment function will be activated only when the EI Operating Account is in a surplus position. Once the program is in surplus, funds will be returned to employers and workers through premiums set lower than break-even rate. In the light of the modifications to the rate setting mechanism, the Government also announced that it would review the cost and structure of the CEIFB to ensure that it is as cost effective as possible.

For more information on the CEIFB and copies of the reports of the Board of Directors and the Chief Actuary, please visit