Ottawa, November 9, 2005
2005-075

Archived - Government Welcomes Employment Insurance Premium Reduction for 2006

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Minister of Finance Ralph Goodale and Minister of Human Resources and Skills Development Belinda Stronach are pleased with the Employment Insurance (EI) Commission's setting of the EI premium rate at $1.87 for 2006, a reduction from its current level of $1.95 per $100 of insurable earnings.

This is the first time the rate has been set by the EI Commission according to the new rate-setting process introduced in Budget 2005. The rate paid by employers will also be reduced to $2.62 from $2.73 per $100 of insurable earnings. The maximum insurable earnings will remain at $39,000 for 2006.

According the EI Chief Actuary, this is the rate that should generate just enough premium revenue in 2006 to cover the payments that will be made during the year, in accordance with the Employment Insurance Act.

"Setting the rate at $1.87 will save Canadian workers and employers more than $800 million in premiums as compared to last year's rate," stated Minister Goodale.

In noting the rate reduction, Minister Stronach said, "We are committed to lowering the cost of doing business in Canada, so I am pleased to see the new lower rates. Thanks to EI premium reductions by this government, individual employees will pay up to $516 less in 2006 than they did in 1994 and individual employers will pay up to $722 less per employee." Both Ministers noted that the rate set by the Commission will become effective January 1, 2006.

The EI premium rates for Quebec will be $1.53 for employees and $2.14 for employers. These rates are lower than in the rest of Canada because, starting in January 2006, Quebec will offer its own parental benefits.

Under the new rate-setting process, the EI Commission must set the EI premium rate for the coming year no later than November 14. For its part, the Government of Canada under the same legislation, has the authority to substitute a different rate no later than November 30 if it is in the public interest to do so.

This marks the 12th consecutive annual reduction in the EI premium rate. As a result, employers and employees will pay $12 billion less in premiums in 2006 than they would have paid under the 1994 rate of $3.07.

The attached backgrounder provides further details about changes to premium rates and maximum insurable earnings since 1994.

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For further information, media may contact:

Pat Breton
Press Secretary
Office of the Minister of Finance
(613) 996-7861
David Gamble
Public Affairs and Operations Division
Department of Finance Canada
(613) 996-8080
Normand Bergeron
Special Advisor, Communications
Office of the Minister of Human Resources and Skills Development
(819) 994-2482
Media Relations
Human Resources and Skills Development Canada
(819) 994-5559

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Backgrounder

Impact of Changes to the EI Premium Rate and Maximum Insurable Earnings-1994 to 2006


Maximum Annual Insurable Earnings Premium Rate Per $100 of Insurable Earnings Maximum Annual Contribution Change in Maximum Annual Contribution

    EE* ER* EE ER EE ER
1994 $40,560 $3.07 $4.30 $1,245 $1,743 **
1995 $42,380 $3.00 $4.20 $1,271 $1,780 +$26 +$37
1996 $39,000 $2.95 $4.13 $1,151 $1,611 -$121 -$169
1997 $39,000 $2.90 $4.06 $1,131 $1,583 -$20 -$27
1998 $39,000 $2.70 $3.78 $1,053 $1,474 -$78 -$109
1999 $39,000 $2.55 $3.57 $995 $1,392 -$59 -$82
2000 $39,000 $2.40 $3.36 $936 $1,310 -$59 -$82
2001 $39,000 $2.25 $3.15 $878 $1,229 -$59 -$82
2002 $39,000 $2.20 $3.08 $858 $1,201 -$20 -$28
2003 $39,000 $2.10 $2.94 $819 $1,147 -$39 -$55
2004 $39,000 $1.98 $2.77 $772 $1,081 -$47 -$66
2005 $39,000 $1.95 $2.73 $761 $1,065 -$12 -$16
2006 $39,000 $1.87 $2.62 $729 $1,021 -$31 -$44
Cumulative change in maximum annual contribution since 1994  -$516  -$722

* EE: employee contributions; ER: employer contributions (1.4 times the employee rate). For 2006, premium rates apply to residents of all provinces except Quebec, where the Quebec Parental Insurance Plan will come into effect on January 1, 2006. The Quebec EI premium rates will be $1.53 and $2.14 for employees and employers respectively, reflecting the required actuarial adjustment.

** These columns show yearly changes since 1994. Numbers are rounded.