Employment Insurance Monitoring and Assessment Report 2014/2015   Chapter II - 7. Employment Insurance financial information

7. Employment Insurance financial information

The Employment Insurance (EI) program is financed entirely by contributions that employees and employers pay on insurable earnings. To record all EI related financial transactions, the federal government established the Employment Insurance Operating Account. All amounts received under the Employment Insurance Act are deposited into the Consolidated Revenue Fund (CRF) and credited to the Account, while all benefits and administration costs provided for under the Act are paid out of the CRF and debited from the Account. The Employment Insurance Operating Account was created on January 1, 2009, with a zero balance, replacing the former Employment Insurance Account. The following sections provide information on the EI premium rate and recent trends in revenues and expenditures recorded in the Employment Insurance Operating Account.

7.1 Employment Insurance Premium Rate

The EI program is based on the principle of universal coverage of all employees in insurable employment. Employees in insurable employment must pay EI premiums for every $100 of insurable earnings, up to the maximum yearly insurable earnings threshold. Footnote 167 Employers pay premiums that are 1.4 times those of their employees. This means that employees pay 5/12 of program costs, while employers pay 7/12.

In 2015, the premium rate for employees (who were not covered by a provincial parental insurance plan) was $1.88 per $100 of insurable earnings, the same amount as in 2014 and 2013. As a result, the premium rate of employers also remained unchanged from 2013 to 2015, at $2.632 for every $100 of insurable earnings.

The EI program provides for a reduction in the premium rate of employees covered by a provincial parental insurance plan. For employees living in a province with this type of program, the premium rate was $1.54 in 2015, $1.53 in 2014, and $1.52 in 2013 per $100 of insurable earnings. For their employers, the rate was therefore $2.156 in 2015, $2.142 in 2014, and $2.128 in 2013 per $100 of insurable earnings (see Table 68).

Table 68 - Employment Insurance Premium Rates for Employees and Employers, Canada, 2013 to 2015
Premium Rate per $100 of Insurable Earnings
2013 2014 2015
Residents of a province without a provincial parental insurance plan Employees $1.88 $1.88 $1.88
Employers

(calculated at the rate of 1.4 times the employee premiums)
$2.632 $2.632 $2.632
Residents of a province with a provincial parental insurance plan Employees $1.52 $1.53 $1.54
Employers

(calculated at the rate of 1.4 times the employee premiums)
$2.128 $2.142 $2.156
  • Source: Government of Canada, Public Accounts of Canada 2015, volume I: Summary Report and Consolidated Financial Statements (Ottawa: Receiver General of Canada, December 2015)

Quebec is currently the only province that administers its own plan. Since 2006, Quebec has paid parental, adoption, maternity, and paternity benefits under the Quebec Parental Insurance Plan, and they replace the same type of special benefits provided by the EI program. Thus, the premium rate is lower in Quebec than elsewhere in Canada because the province itself collects the premiums to finance its plan.

The Premium Reduction Program (PRP) also reduces EI premiums of employers when their employees are covered by a short-term disability plan (i.e., a cumulative paid sick leave plan or weekly indemnity plan) that meets or exceeds certain requirements established by the Canada Employment Insurance Commission. To qualify, employers must show how they return to their employees their portion of the savings (i.e., 5/12 of the total savings) that are generated by reducing the premium rate. Further information on the PRP is presented in Section 5.2 of Chapter II.

Finally, the EI program also includes a provision for contributors who are unlikely to be eligible for EI benefits. Employees whose insurable earnings are equal to or lower than $2,000 in a calendar year are eligible for a full refund of their premiums when filing their income tax return. Additional information on the premium refund provision is provided in Section 1.5 of Chapter II.

7.2 Recent Trends in Revenues and Expenditures

According to the Public Accounts of Canada, in 2014/2015, total EI revenues ($23.0 billion) were higher than EI expenditures ($19.7 billion), generating a $3.3 billion surplus. By comparison, surpluses of $3.2 billion and $2.0 billion were recorded in 2013/2014 and 2012/2013, respectively.

On March 31, 2015, the accumulated surplus in the Employment Insurance Operating Account was $0.5 billion, compared with an accumulated deficit of $2.7 billion on March 31, 2014 and $6.0 billion on March 31, 2013. This increase in the balance is mainly a result of the decline in the number of claims established, which can be attributed to the fact that the unemployment rate has fallen after peaking during the 2008 recession. Annex 5 summarizes the EI revenues and expenditures for the past three fiscal years, which are reported in the Employment Insurance Operating Account financial statements and published in the Public Accounts of Canada.

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