Question Period Note: Employment Insurance Premium Rate

On September 14, 2021, the Canada Employment Insurance Commission set the EI premium rate for 2022 at $1.58 per $100 of insurable earnings, which is unchanged from the 2020 and 2021 premium rates. The 2022 Actuarial Report on the EI Premium Rate will be tabled in Parliament by December 3, 2021.

• To reduce the financial impact facing employers and employees due to the COVID-19 pandemic, the Government froze the EI premium rate at the 2020 rate for 2021 and 2022.

• As such, the EI premium rate for 2022 remains frozen at $1.58 per $100 of insurable earnings.

• This measure keeps the EI premium rate at its lowest level since 1980, supporting Canadian workers and employers as the economic recovery continues.

• The Government is committed to ensuring that the EI Program is accessible, adequate, and affordable for employees and employers while remaining financially sustainable in the long-term

Premium rates are set according to a seven-year break-even mechanism that will result in a balance of $0 in the EI Operating Account at the end of that seven-year period. The forecast amount of EI benefits to be paid over the next seven years will determine the total amount of EI premiums that need to be collected from employees and employers. The EI Senior Actuary calculates the EI premium rate using economic projections, including forecast unemployment rates and growth in earnings.

Given the economic impact of the COVID-19 pandemic, the Government used its authority under the EI Act to freeze the EI premium rate for 2021 and 2022 at the 2020 rate. On September 14, 2021, the Canada Employment Insurance Commission set the 2022 premium rate at $1.58 per $100 of insurable earnings. The employer rate is $2.212, or 1.4 times the employee rate.

EI premium rates are lower for Quebec residents because the province administers its own parental insurance plan, known as the Quebec Parental Insurance Plan (QPIP). The 2022 QPIP reduction is 38 cents, with premium rates for employees in Quebec set at $1.20 per $100 of insurable earnings.

Premiums Payable

Maximum Insurable Earnings (MIE) for 2022 will be $60,300, an increase of $4,000 from the 2021 MIE. Based on the MIE and premium rate, the maximum 2022 premiums paid by workers will be $952.74 (up $63.20 from 2021), while employers will pay a maximum of $1,333.84 per employee (up $88.48 from 2021). The increased MIE for 2022 will also result in a higher maximum weekly benefit of $638 in 2022 (up $43 from 2021).

Employers and their employees registered in qualified wage-loss plans under the Premium Reduction Program (PRP) are estimated to receive $1.159B in premium savings for 2022.

EI Operating Account

The 2022 Actuarial Report indicates that the EI Operating Account will show a cumulative deficit of $23.2B as of December 31, 2021. This deficit is projected to increase to approximately $33.9B as of December 31, 2022.

The Government previously announced on September 14, 2020 that it would credit the EI Operating Account for costs related to the Canada Emergency Response Benefit (CERB). As such, costs related to the CERB do not affect the current EI Operating Account projections.

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