Summary of the 2022 Actuarial Report on the Employment Insurance Premium Rate

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The Canada Employment Insurance Commission (the Commission) is pleased to present the summary of the 2022 Actuarial Report on the Employment Insurance Premium Rate. This is one of the Commission’s responsibilities as defined per section 66.31 of the Employment Insurance Act.

The Canada Employment Insurance Commission

The Commission is responsible to administer the Employment Insurance Act (the Act). The objective of the Act is to provide employment insurance (EI) benefits as well as employment programs and services to eligible workers. The financial transactions associated with the program are reported through the EI Operating Account.

The Commission is a tripartite organization that has been overseeing the EI program for over 80 years. The Commission has 4 members, 3 of whom are voting members representing the interests of workers, employers, and government. The Governor in Council appoints the Commissioner for Workers and the Commissioner for Employers following consultations with their respective stakeholders. They represent and reflect the views of their respective constituencies. The Deputy Minister of the Department of Employment and Social Development Canada (ESDC) represents the government and is the Chairperson of the Commission. The Senior Associate Deputy Minister of the Department of ESDC and Chief Operating Officer for Service Canada is the Vice-Chairperson. The Vice-Chairperson has voting privileges only when acting on behalf of the Chairperson.

The EI Operating Account is established in the accounts of Canada by the Act. All amounts received under the Act are deposited in the Consolidated Revenue Fund. The EI Operating Account is credited for these amounts. The benefits and the costs of administration of the Act are paid out of the Consolidated Revenue Fund and charged to the EI Operating Account. The balance of the account with the Receiver General for Canada represents the Consolidated Revenue Fund. The Commission is responsible for the delivery of the EI program and the day-to-day administration of the EI Operating Account. This responsibility is delegated to officers and employees of the department.

A key duty of the Commission is setting the annual EI premium rate. The Commission engages the services of a Fellow of the Canadian Institute of Actuaries to perform the actuarial forecasts and estimates for the purposes of EI premium rate setting. This person is also an employee of the Office of the Superintendent of Financial Institutions (OSFI).

On March 14, 2018, Ms. Annie St-Jacques was appointed as the Commission’s Senior Actuary, EI Premium Rate Setting (EI Senior Actuary). Ms. St-Jacques is a fellow of both the Canadian Institute of Actuaries and the Society of Actuaries. She is also a director at OSFI and has over 15 years of actuarial experience.

Additionally, another key duty of the Commission is to make regulations with the approval of the Governor in Council. There are regulations to provide premiums reductions when payments under a provincial law reduce or eliminate special benefits payable under the Act. The Commission establishes the premium reduction for employers and employees to account for the Quebec Parental Insurance Plan (QPIP). This plan replaces EI maternity and parental benefits for Quebec residents.

In addition, the Commission produces the annual EI Monitoring and Assessment Report. This fulfills its legislated responsibility to monitor and assess the impact and effectiveness of the benefits and other assistance provided for in the Act for individuals, communities and the economy.

The Act authorizes the Commission to enter into Labour Market Development Agreements with each province and territory with the approval of the Minister of Employment and Social Development (ESD). Under these agreements, the Government of Canada provides contributions to provincial and territorial governments to be used to pay for all or a portion of the costs of their benefits and measures. The benefits and measures provided must be similar to the employment benefits and support measures established under Part II of the Act. The contributions can also be used to pay for any administration costs incurred in providing these similar benefits and measures.

Premium rate setting

Since April 1, 2016, the Commission has been responsible for setting the annual EI premium rate. The rate is set according to a 7-year break-even mechanism, as forecast by the EI Senior Actuary. This premium rate will result in a balance of $0 in 7 years in the EI Operating Account. This means that any cumulative surplus or deficit will be eliminated after this period. Annual changes to the premium rate are subject to a legislated limit of 5 cents. The Governor in Council may change this maximum if it is in the public interest. The 7-year break-even mechanism ensures stable and predictable premium rates for Canadian workers and employers. It is also intended to ensure that EI contributions are only used for EI purposes.

The Commission is also responsible for the publication of the annual Maximum Insurable Earnings (MIE). EI premiums are paid up to this income threshold. The Commission also determines the premium reductions related to the QPIP and employer wage-loss plans under the Premium Reduction Program (PRP).

The EI Senior Actuary prepares an actuarial report. This report forecasts the premium rate for the following year, based on the 7-year break-even mechanism. The Commission prepares a summary of that report and makes both the actuarial report and its summary available to the public. These reports are available the day the premium rate is set. The Minister of ESD tables the Actuary’s report and the Commission’s summary report in both Houses of Parliament within 10 sitting days of their publication. This ensures transparency and accountability in the EI premium rate setting process.

Recent Employment Insurance program changes

The COVID-19 pandemic has caused unprecedented disruptions to Canada’s labour market. Since the beginning of the pandemic, the Government of Canada has made changes to the EI program to support Canadian workers as the labour market continues to recover.

Premium freeze

On August 20, 2020, the Government announced that it would freeze the EI premium rate for 2021 and 2022 at the 2020 premium rate.

Employment Insurance transition measures

The following measures were introduced to facilitate access to EI for eligible claims established between September 27, 2020 and September 25, 2021:

  • a minimum unemployment rate of 13.1% for all EI regions, resulting in a uniform entrance requirement of 420 hours for regular benefits
  • a one-time credit of 300 insurable hours, which combined with the minimum unemployment rate of 13.1%, results in benefit eligibility with 120 hours of work for EI regular benefits
  • a one-time credit of 480 insurable hours, resulting in benefit eligibility with 120 hours of work for EI special benefits
  • a reduced earnings threshold of $2,500 for fishers to qualify for fishing or special benefits, as a result of the minimum unemployment rate of 13.1%
  • allowing fishers to have their fishing benefits calculated using their actual fishing earnings from their current claim, or their fishing earnings from their claim for the same season from one of the 2 previous seasons, whichever is higher. The Government has extended this measure until December 18, 2021
  • a minimum weekly benefit rate of $500 for EI regular benefits, fishing benefits and special benefits ($300 for extended parental benefits)
  • a maximum entitlement of 50 weeks of EI regular benefits
  • the requirement to submit a medical certificate for new EI sickness benefit claims was waived
  • an extension of the qualifying period by 28 weeks for those who had claimed the emergency benefits

In addition, the Government waived the one-week waiting period for the following:

  • all EI claims established between September 27, 2020 and October 25, 2020
  • EI sickness claims established on or after September 27, 2020 for a period of 1 year to encourage compliance with public health measures
  • all EI claims established between January 31, 2021 and September 25, 2021

Finally, self-employed workers who have opted in to the EI program to access special benefits may use a 2020 earnings threshold of $5,000 for claims established between January 3, 2021 and September 25, 2021. This is lower compared to the previous threshold of $7,555.

Work-Sharing

The Government announced in Budget 2021 that it would extend the temporary Work-Sharing measures until September 24, 2022. Changes include extending the duration of Work-Sharing agreements, waiving the mandatory cooling off period, expanding eligibility criteria, and streamlining the application process.

Employment Insurance minimum benefit rate

On July 30, 2021, the Government announced a new minimum weekly EI benefit rate. Claims established between September 26, 2021 and November 20, 2021 will receive a minimum of $300 per week. This ensures that EI claimants receive a similar treatment to recipients of the Canada Recovery Benefit (CRB). The CRB provides income support to employed and self-employed workers ineligible for EI benefits but whose employment is affected by COVID-19.

Employment Insurance simplification and improved accessibility

Budget 2021 announced legislative changes to make EI more accessible and simpler for Canadians while the job market begins to improve. The following changes will apply to all eligible claims established between September 26, 2021 and September 24, 2022:

  • establishing a common, national 420 hour entrance requirement for regular and special benefits, with a 14-week minimum entitlement for regular benefits. The earnings thresholds for fishers and self-employed workers registered for special benefit coverage were also changed ($2,500 for fishing benefits, and $5,289 for self-employed workers)
  • supporting multiple job holders and those switching jobs by counting all insurable hours and employment towards a claimant’s EI eligibility. This measure will apply as long as the last job separation is deemed valid
  • simplifying rules around the treatment of severance, vacation pay, and other monies paid on separation to allow claimants to start receiving EI benefits sooner

Seasonal claimants

Budget 2021 announced an extension to the period of eligibility under the seasonal worker pilot project. This measure provides up to 5 additional weeks (to a maximum of 45 weeks) of EI regular benefits to eligible seasonal claimants in 13 targeted EI economic regions. This change will apply to eligible claims established through October 29, 2022.

Employment Insurance sickness benefits

Budget 2021 announced the enhancement of EI sickness benefits from 15 to 26 weeks. This extension will take effect in the summer of 2022.

Training benefit

The Government has delayed the implementation of the following 2 EI components of the Canada Training Benefit:

  • the EI Training Support Benefit, designed to help workers cover their living expenses when they require time off work to pursue training
  • the EI Premium Rebate for Small Businesses, designed to help offset EI premium increases resulting from the EI Training Support Benefit

Emergency benefits

The Government announced on September 14, 2020 that it would credit costs to the EI Operating Account related to the EI Emergency Response Benefit (EI ERB). This means that both Canada Emergency Response Benefit (CERB) and EI ERB expenses are to be charged to the Consolidated Revenue Fund.

The CERB and the EI ERB were part of the Government’s COVID-19 Economic Response Plan. These benefits provided eligible workers $500 a week for up to 28 weeks for the period of March 15, 2020 to October 3, 2020.

2022 premium rate

The EI Senior Actuary has forecast the 7-year break-even rate for 2022 at $1.81 per $100 of insurable earnings. This is an increase of 18 cents from the revised 2021 rate of $1.63. The 2021 7-year forecast break-even rate was originally estimated to be $1.93 based on existing EI provisions and upcoming program changes. Through an additional memorandum, the rate was decreased to $1.63 to account for the crediting of the EI Operating Account for costs related to the EI ERB.

The increase between the $1.63 and $1.81 7-year forecast break-even rates is mainly due to the increase in EI regular benefits expected to be paid in 2021. The EI temporary and permanent measures are also responsible for the increase in the break-even rate.

The actuarial forecast rests on a number of sensitive assumptions, some of which have a more significant impact on the 7-year forecast break-even rate. For example, a ±0.5% variation in the average unemployment rate over the 2022 to 2028 period would result in a 7 cent increase/decrease in the 2022 7-year forecast break-even rate.

The 2022 EI premium rate remains frozen at the 2020 premium rate level of $1.58 per $100 of insurable earnings. This measure is a part of the Government of Canada’s economic response to COVID-19. The 2022 premium rate for Quebec residents is $1.20 per $100 of insurable earnings. This accounts for the fact that the province administers its own parental insurance plan.

Employers pay 1.4 times the employee premium rate. For 2022, the premium rate for employers will remain at $2.21 ($2.212 unrounded) per $100 of insurable earnings. For employers in Quebec, the premium rate for 2022 will be $1.68 per $100 of insurable earnings.

A ± 1 cent variation in the premium rate would result in a $1.413 billion increase/decrease in the cumulative balance of the EI Operating Account at the end of the 7-year forecast period.

Actuarial report: Main findings

This summary presents the results of the EI Senior Actuary’s report regarding the 2022 EI premium rate. The report used actuarial forecasts and estimates to calculate the EI premium rate, the premium reductions related to the QPIP and employer wage-loss plans under the PRP, as well as the annual MIE.

Break-even premium rate

The forecast 7-year break even EI premium rate for 2022 is $1.81 per $100 of insurable earnings. This represents an increase of 18 cents from the revised 2021 rate of $1.63.

2022 premium rate

The EI premium rate for 2022 will remain frozen at the 2020 rate of $1.58 per $100 of insurable earnings.

Quebec Parental Insurance Plan premium reduction

The 2022 QPIP reduction is 38 cents, therefore the premium rate applicable to residents of Quebec will be $1.20 per $100 of insurable earnings.

Premium reductions are provided for residents of a province that administers its own insurance plan where those benefits replace federal EI benefits. EI premium rates are lower for Quebec residents because the province administers its own parental insurance plan financed by Quebec workers and employers.

Premium Reduction Program

Premium reductions are provided for employers who provide their employees with qualified wage-loss plans. These plans must meet certain requirements and reduce EI special benefits (for example, sickness benefits) payable. There are 4 categories of qualified plans, and each category has a rate of reduction calculated annually. The calculations reflect each category’s average rate of savings for EI.

In 2022, it is estimated that the reductions will provide registered employers and their employees with $1.159 billion in premium savings. The table below shows the premium reductions.

There are approximately 28,000 employers registered in the PRP. This covers an estimated total amount of insurable earnings in 2022 of about $342 billion.

Premium Reduction Program
Categories Category 1 Category 2 Category 3 Category 4
Premium reduction (per $100 of insurable earnings) $0.23 $0.36 $0.36 $0.39

Maximum Insurable Earnings

The MIE is the maximum annual amount of employment income on which EI premiums are paid by workers and their employers. This is also the maximum annual amount for which benefits may be paid. The MIE for 2022 is $60,300, up from $56,300 in 2021.

The MIE is indexed to the annual percentage increase in the average weekly earnings of the industrial aggregate in Canada, as published by Statistics Canada. This ensures that the level of insured income maintains its relative value.

The table below shows the maximum amounts of premiums paid by workers and employers (per employee) for 2022 based on the MIE and premium rates.

Maximum Insurable Earnings
Contributor Premium rate (per $100 of insurable earnings) Maximum annual contribution 2022 Difference in maximum annual contribution from 2021
Workers $1.58 $952.74 $63.20
Employers $2.212 $1,333.84 $88.48
Workers in Quebec $1.20 $723.60 $59.26
Employers in Quebec $1.68 $1,013.04 $82.96

Self-employed workers

Self-employed workers who have opted into the EI program to access EI special benefits pay the employee premium rate. Self-employed workers do not pay the employer portion of EI premiums.

A self-employed worker who opted into the EI program may qualify for EI special benefits providing they meet prescribed conditions. This includes a minimum amount of self-employed earnings. For 2022, the prescribed amount of self-employed earnings is $8,092. However, special temporary measures are lowering this amount to $5,289 for claims established between September 26, 2021 and September 24, 2022.

The minimum level of earnings required by self-employed workers is indexed annually to the growth in the MIE. This ensures that the level of earnings required to be eligible for special benefits maintains its relative value over time.

Employment Insurance Operating Account projections

The EI Senior Actuary’s report projects the EI Operating Account to show a cumulative deficit of $33.883 billion as of December 31, 2022. This projection is based on the premium rates described above. The table below shows the forecast EI revenues and expenditures.

Projection of the EI Operating Account using a premium rate of 1.58% ($ million)
Calendar year Premium rate (%) Revenues: Gross premiums after refunds Revenues: Reduction for WLP* Revenues: Reduction for provincial plans Revenues: SBPR** Revenues: Other adj.*** Net premiums Expenditures Annual surplus (deficit) Cumulative surplus (deficit) 31 December
2020 1.58% 24,226 (994) (1,328) (57) 21,847 28,275 (6,428) (1,254)
2021 1.58% 26,224 (1,093) (1,490) (50) 23,591 45,568 (21,977) (23,231)
2022 1.58% 28,461 (1,159) (1,535) (26) 25,741 36,394 (10,653) (33,883)

* Wage-Loss Plans
** Small Business Premium Rebate
*** Adjustments for the timing of premium assessment

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