Summary of the 2023 Actuarial Report on the Employment Insurance Premium Rate
On this page
- List of abbreviations
- The Canada Employment Insurance Commission
- Recent Employment Insurance program changes
- 2023 premium rate
- Actuarial report: Main findings
List of abbreviations
- COVID-19
- Coronavirus Disease 2019
- EI
- Employment Insurance
- ESD
- Employment and Social Development
- ESDC
- Employment and Social Development Canada
- MIE
- Maximum Insurable Earnings
- OSFI
- Office of the Superintendent of Financial Institutions
- PRP
- Premium Reduction Program
- QPIP
- Quebec Parental Insurance Plan
- SBPR
- Small Business Premium Rebate
- WLP
- Wage-loss Plans
The Canada Employment Insurance Commission (the Commission) presents its summary of the 2023 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 Act).
The Canada Employment Insurance Commission
The Commission is responsible for administering the Act. The objective of the Act is to provide eligible workers with employment insurance (EI) benefits. The Act also provides eligible workers with employment programs and services.
The Commission has overseen the EI program for over 80 years. It is a tripartite organization. It consists of 4 members, 3 of whom are voting members. They represent the interests of workers, employers, and the Government. The Governor in Council appoints the Commissioner for Workers and the Commissioner for Employers. Each Commissioner represents and reflects the views of their constituencies. The Deputy Minister of the Department of Employment and Social Development Canada (ESDC) is the Chairperson of the Commission. The Senior Associate Deputy Minister of the Department of ESDC and Service Canada's Chief Operating Officer is the Vice-Chairperson of the Commission. The Vice-Chairperson only votes when acting for the Chairperson.
The Commission’s responsibilities include the day-to-day administration of the EI Operating Account. It delegates this responsibility to the officers and employees of the Department of ESDC.
The EI program’s financial transactions are reported through the EI Operating Account. The Act establishes the EI Operating Account in the public accounts of Canada. 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. The EI Operating Account is charged for these amounts.
Premium rate setting
Since April 1, 2016, the Commission sets the EI premium rate every year. The Commission engages the services of a Fellow of the Canadian Institute of Actuaries to perform actuarial forecasts and estimates. This person is also an employee of the Office of the Superintendent of Financial Institutions (OSFI). On February 3, 2022, OSFI appointed Mathieu Désy as the Commission’s Senior Actuary, EI Premium Rate Setting (EI Senior Actuary).
The rate is set according to a 7-year forecast break-even rate. The EI Senior Actuary forecasts this break-even rate in an actuarial report. The break-even rate is the premium rate that would result in an EI Operating Account balance of $0 in 7 years. This means that the break-even rate also eliminates any cumulative surplus or deficit 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 limit if it is in the public interest. These measures ensure stable and predictable premium rates for employees and employers. It also ensures that EI contributions are only used for EI purposes.
The Commission publishes the Maximum Insurable Earnings (MIE) each year. Employees and employers pay EI premiums up to this threshold.
The Act includes regulations for providing premium reductions to provinces and employers that deliver plans that reduce or replace EI special benefits. The Commission determines premium reductions for employees and employers in Quebec. These premium reductions account for the Quebec Parental Insurance Plan (QPIP). The QPIP replaces EI maternity and parental benefits for Quebec residents. The Commission also determines premium reductions for employers who provide their employees with qualified wage-loss plans. This includes short-term disability plans that reduce the demand on the EI program (for example, for sickness benefits). Employers register these plans under the Premium Reduction Program (PRP).
The Commission prepares a summary of the actuarial report. It also publishes the actuarial report and its summary on the day the premium rate is set. The Minister of Employment and Social Development (ESD) tables the actuarial report and summary in both Houses of Parliament. Tabling must occur within 10 sitting days of their publication. This ensures transparency and accountability in the annual EI premium rate setting process.
Recent Employment Insurance program changes
Over the last year, the following changes have been made to the EI program:
Premium freeze
Budget 2022 announced that the two-year freeze to the EI premium rate will end in 2023.
Temporary measures to facilitate access to Employment Insurance
The most current temporary measures intended to facilitate access to EI in response to the COVID-19 pandemic are summarized below. These measures were announced in Budget 2021 and are in effect until September 24, 2022:
- a uniform entrance requirement of 420 insurable hours to be eligible for EI regular and special benefits
- a common entrance requirement of $2,500 in earnings for fishers to be eligible for fishing benefits
- a reduced entrance requirement of $5,289 in earnings to access special benefits for self-employed workers who have opted in to the EI program
- ensuring that all insurable hours and employment count towards a claimant’s eligibility, as long as the last job separation is found to be valid
- allowing claimants to start receiving EI benefits sooner by simplifying rules around the treatment of severance, vacation pay, and other monies paid on separation
Work-Sharing
The current temporary Work-Sharing measures will end on 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.
Seasonal claimants
Budget 2022 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. These rules will apply until October 2023, as the Government considers a long-term measure that best targets the needs of seasonal workers.
Employment Insurance sickness benefits
Budget 2021 announced the enhancement of sickness benefits from 15 to 26 weeks. This extension will take effect by the end 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
Other
Budget 2022 announced the following changes:
- amendments to Part II of the EI Act to broaden client and program eligibility and the types of interventions funded under Labour Market Development Agreements with provinces and territories
- establishment of the EI Board of Appeal, originally announced in 2019, to replace the current EI appeals process under the Social Security Tribunal General Division
2023 premium rate
The EI Senior Actuary has forecast the 7-year break-even rate for 2023. It is $1.74 per $100 of insurable earnings. This is a decrease of 7 cents from the 2022 forecast break-even rate of $1.81.
This decrease of 7 cents is mainly due to revised costs of the temporary measures, as well as reductions in projected regular benefits paid due to lower than expected unemployment rates.
The actuarial forecast rests on multiple assumptions. Some assumptions affect the 7-year forecast break-even rate more than others do. For example, a ±0.5% variation in the average unemployment rate over the 2023 to 2029 period would result in a 7 cent increase/decrease in the 2023 7-year forecast break-even rate.
The 2023 EI premium rate is $1.63 per $100 of insurable earnings ($2.28 for employers). This is the maximum increase permitted by the legislated 5-cent limit on annual rate changes. The 5-cent legislated limit means that the 2023 EI premium rate is different from the 7-year forecast break-even rate of $1.74 per $100 of insurable earnings. The 2023 premium rate for Quebec residents is $1.27 per $100 of insurable earnings ($1.78 for employers). This reduction accounts for the province administering QPIP, its own parental insurance plan.
Employers pay 1.4 times the employee premium rate. For 2023, the premium rate for employers is $2.28 ($2.282 unrounded) per $100 of insurable earnings. For employers in Quebec, the premium rate for 2023 is $1.78 ($1.778 unrounded) per $100 of insurable earnings.
Variations in the premium rate affect the EI Operating Account's cumulative balance. A ± 1 cent variation over 2023 to 2029 would result in a $1.471 billion increase/decrease in the cumulative balance at the end of the 7-year forecast period.
Actuarial report: Main findings
This summary presents the results of the 2023 Actuarial Report on the EI premium rate. The report used actuarial forecasts and estimates to determine the EI premium rate and the MIE. It also calculated the premium reductions related to the QPIP and for employer wage-loss plans under the PRP.
Break-even premium rate
The forecast 7-year break-even EI premium rate for 2023 is $1.74 per $100 of insurable earnings. This represents a decrease of 7 cents from the 2022 rate of $1.81.
2023 premium rate
The EI premium rate for 2023 is $1.63 per $100 of insurable earnings ($2.28 for employers).
Quebec Parental Insurance Plan premium reduction
The 2023 QPIP reduction is 36 cents. The premium rate for Quebec residents is $1.27 per $100 of insurable earnings ($1.78 for employers in Quebec).
Residents of a province that administers its own insurance plan can receive premium reductions. This plan must reduce or replace federal EI benefits. EI premium rates are lower for Quebec residents because the province administers its own parental insurance plan. Quebec workers and employers finance this plan.
Premium Reduction Program
Employers can receive premium reductions if they 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 approximately 27,000 employers registered in the PRP. This covers an estimated total amount of insurable earnings in 2023 of about $368 billion.
There are 4 categories of qualified plans. Each category has a rate of reduction that is determined each year. The calculations reflect each category’s average rate of savings for EI. In 2023, reductions will provide registered employers and their employees with an estimated $1.345 billion in premium savings. The table below shows the premium reductions.
| Categories | Category 1 | Category 2 | Category 3 | Category 4 |
|---|---|---|---|---|
| Premium reduction (per $100 of insurable earnings) | $0.25 | $0.39 | $0.39 | $0.42 |
Maximum Insurable Earnings
Workers and employers pay EI premiums on insurable employment income. Those premiums are paid up to an income threshold, the MIE. This threshold also determines the maximum weekly benefit rate. The MIE for 2023 is $61,500. This is an increase from $60,300 in 2022.
Statistics Canada publishes average weekly earnings of the industrial aggregate in Canada. The MIE is indexed to the annual percentage increase in this value. This ensures that the level of insured income maintains its relative value.
The table below shows the maximum amounts of premiums payable by workers and employers (per employee) for 2023. It is based on the MIE and premium rates.
| Contributor | Premium rate (per $100 of insurable earnings) | Maximum annual contribution 2023 | Difference in maximum annual contribution from 2022 |
|---|---|---|---|
| Workers | $1.63 | $1,002.45 | $49.71 |
| Employers | $2.282 | $1,403.43 | $69.59 |
| Workers residing in Quebec | $1.27 | $781.05 | $57.45 |
| Employers in Quebec | $1.778 | $1,093.47 | $80.43 |
Self-employed workers
Self-employed workers can access EI special benefits. They must opt-in to the EI program and pay the employee premium rate. They do not pay the employer portion of EI premiums.
A self-employed worker who opts-in to the EI program may qualify for EI special benefits if they meet prescribed conditions. This includes having a minimum amount of self-employed earnings. For 2023, the minimum amount of self-employed earnings is $8,255.
The minimum level of self-employed earnings is indexed to the growth in the MIE. It is calculated each year. This ensures the minimum level of earnings retains 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 $25.213 billion as of December 31, 2023. This projection is based on the premium rates described above. The table below shows the forecast EI revenues and expenditures.
| Calendar year | Premium rate (%) | Employer premium per employee (%) | 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 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 1.58% | 2.21% | 26,491 | (1,135) | (1,540) | - | (71) | 23,744 | 48,355 | (24,611) | (25,865) |
| 2022 | 1.58% | 2.21% | 28,896 | (1,209) | (1,595) | - | 10 | 26,102 | 27,492 | (1,390) | (27,255) |
| 2023 | 1.63% | 2.28% | 30,706 | (1,345) | (1,555) | (26) | - | 27,780 | 25,738 | 2,042 | (25,213) |
- * Wage-Loss Plans
- ** Small Business Premium Rebate
- *** Adjustments for the timing of premium assessment
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