Canada Employment Insurance Financing Board

Through Budget 2008, the Government delivered on its commitment in the Speech from the Throne to improve the governance and management of the Employment Insurance Account by establishing the Canada Employment Insurance Financing Board.

The Canada Employment Insurance Financing Board (CEIFB) is a small Crown corporation established by the CEIFB Act that came into force on June 20, 2008. The CEIFB reports to Parliament through the Minister of Human Resources and Social Development.

The creation of the CEIFB improves the governance and management of the EI Account. Pursuant to the CEIFB Act and amendments to the Employment Insurance Act, the CEIFB will be responsible for:

• Implementing an improved EI premium rate-setting mechanism that will ensure that EI revenues and expenditures break even over time;
  
  
• Managing a separate bank account, where any excess EI revenues from a given year will be held and invested until they are used to reduce premium rates in subsequent years; and
  
  
• Maintaining a $2 billion cash reserve as a contingency fund in order to support relative premium rate stability within legislated parameters.

To establish the reserve, the Government of Canada will transfer $2 billion from existing resources in its Consolidated Revenue Fund.

To contribute to the relative stability of EI premium rates, the Board will be limited in the extent to which it can change the rate by a maximum of 15 cents per year.

Human Resources and Social Development Canada will continue to have responsibility related to EI benefits and through Service Canada for program delivery to ensure that the EI program remains responsive to the needs of Canadians and that it is delivered efficiently and effectively.

These changes are in keeping with the Government's commitment to good management and represent important improvements that will generate benefits for workers and their employers. They will:

• ensure independent decision-making regarding the management of EI funds and that these funds are only used to pay for EI expenditures;
  
  
• ensure that premium rates reflect actual program costs and take into account investment returns so that Canadians pay the right premium rates - just sufficient to cover the cost of benefits received; and
  
  
• place the program on firm financial footing going forward.

Members of the Canada Employment Insurance Financing Board

The Canada Employment Insurance Financing Board will be run by a board of seven directors, including a chairperson, with the necessary skills and expertise to effectively carry out the organization's mandate.

Candidates for appointment to the board will be identified by a three-member Nominating Committee made up of:

• a chairperson appointed on the basis of merit by the Minister of Human Resources and Social Development
  
  
• the EI Commissioner for Employers, and
  
  
• the EI Commissioner for Workers.

Board members will be appointed to part-time positions on the recommendation of the Minister of Human Resources and Social Development through the Governor-in-Council process.

Employment Insurance Premium Rate-setting

The new rate-setting mechanism will take into account any surpluses or deficits that arise on a go-forward basis, to ensure that program revenues balance with expenditures over time. The Canada Employment Insurance Financing Board will set the EI premium rate each year to generate just enough premium revenue during that year to cover expected payments, and to ensure that the Board's reserve is maintained.

In setting the rate, the Board is to take into account:

• information provided by the Ministers of Human Resources and Social Development and Finance;
  
  
• differences between EI revenues including investment income and expenditures; and
  
  
• other specified information, including any information the Board considers relevant.

Transactions related to EI will continue to be recorded in the EI Account. Once a year, any difference between the amount of premiums collected and the amount of benefits paid will be settled. Any surplus premiums will be transferred to the Board's separate account where they will be considered in setting the rate for the following year. Likewise, if more was paid in benefits than collected in revenues, this money would be repaid from the Board's separate account.

These differences between premiums collected and benefits paid will be taken into account in subsequent EI premium rate-setting exercises.

The Employment Insurance Commission

With the Canada Employment Insurance Financing Board taking on the responsibility for EI premium rate-setting, the EI Commission will retain its other responsibilities for supporting the EI appeal system, making regulations with the approval of the Governor in Council and reviewing and approving policies related to EI program administration and delivery.

The EI Commission has also been given an ongoing mandate to continue the EI Monitoring and Assessment report as a permanent annual report.

In addition, the EI Commissioner for Workers and the EI Commissioner for Employers are members of the Nominating Committee responsible for identifying and recommending qualified candidates for appointment to the CEIFB Board of Directors. This will ensure business and labour play a role in ensuring the most qualified individuals are selected to manage decision-making concerning the financing of the EI program.

The Government of Canada

Human Resources and Social Development Canada will continue to have responsibility related to EI benefits and through Service Canada for program delivery to ensure that the EI program remains responsive to the needs of Canadians and that it is delivered efficiently and effectively.