About HRSDC | Our Offices | Programs & Services | A-Z Index Ottawa, December 6, 2004 2004-074 Related Documents: Backgrounder Link to Chief Actuary¿s EI Outlook for 2005 As of January 1, 2005, the employment insurance (EI) contribution rate will be reduced to $1.95 from its current level of $1.98 per $100 of insurable earnings, Minister of Finance Ralph Goodale and Minister of Human Resources and Skills Development Joe Volpe announced today. "Today¿s announcement represents the 11th consecutive reduction in the EI premium rate since 1994, when the rate was $3.07. As a result of these rate reductions, employers and employees will pay $10.5 billion less in premiums in 2005 than they would have paid under the 1994 rate," Minister Goodale stated. This year¿s premium rate, compared to the 1994 rate, represents a savings of $485 for employees who make maximum contributions. "This reduction in EI premiums, along with recent changes to the program, such as those related to seasonal workers announced on May 11, 2004, make the program more responsive to the needs of Canadians and of the Canadian workplace," added Minister Volpe. "Canadians can be proud of their efforts to strengthen and grow the Canadian economy. It is that strength and the number of Canadians working that have allowed us to lower the rate again." Today¿s announcement also included a reduction in the rate paid by employers to $2.73 from $2.77 per $100 of insurable earnings, also effective January 1, 2005. Maximum insurable earnings will remain at $39,000 for 2005. The Government remains committed to putting in place a new permanent rate-setting mechanism based on the principles outlined in Budget 2003 and reconfirmed in October¿s Speech from the Throne: premium rates should be set transparently; premium rates should be set on the basis of independent expert advice; expected premium revenues should correspond to expected program costs; premium rate setting should mitigate the impact on the business cycle; and premium rates should be relatively stable over time. The rate set for 2005 is consistent with these principles, taking into account the cost of existing benefits as well as the expected costs of program improvements the Government intends to bring forward in early 2005. The attached backgrounder provides further details about changes in premium rates and maximum insurable earnings since 1994. ___________________ For further information: David Gamble Public Affairs and Operations Division Department of Finance Canada (613) 996-8080 Pat Breton Press Secretary Office of the Minister of Finance (613) 996-7861 Media Relations Human Resources and Skills Development Canada (819) 994-5559 Stephen Heckbert Director of Communications Office of the Minister of Human Resources and Skills Development (819) 994-2482
