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EXECUTIVE SUMMARY

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Section 222 of the Act to implement certain provisions of the budget tabled in Parliament on January 27, 2009 (“Budget 2009”) amends Section 66 of the Employment Insurance Act (“Act”) :

For 2010, the Employment Insurance premium rate for residents of provinces without a Provincial Plan is set at 1.73%.

Therefore, the provisions of the Employment Insurance premium rate setting mechanism that do not apply in 2010 are not reflected in this report.

In accordance with section 65.3 of the Act, the chief actuary is to determine the premium rates for 2010 that should generate just enough premium revenue to cover the payments that will be made during the year, it is my opinion that :

2.06%* (compared to 1.38% for 2009) is the forecasted Employment Insurance break-even rate for 2010 for residents of a province with a Provincial Plan;
0.37% (compared to 0.35% for 2009) is the rate of premium reduction granted by the Employment Insurance Act for 2010 for residents of a province with a Provincial Plan; and
2.43%* (compared to 1.73% for 2009) is the forecasted Employment Insurance break-even rate for 2010 for residents of provinces without a Provincial Plan, or 2.06% plus the premium reduction of 0.37% granted to Provincial Plans.
* However, in accordance with the Act and notwithstanding Budget 2009 which sets the 2010 rate at 1.73%, the premium rate for 2010 for residents of provinces without a Provincial Plan could not have been set at a level higher than the 2009 rate of 1.73% plus 0.15% or 1.88%. Therefore, the premium rate for 2010 for residents of a province with a Provincial Plan could not have been set at a level higher than 1.51% or 1.88% minus 0.37%.

Pursuant to Budget 2009, which sets the premium rate for 2010 at 1.73% for residents of provinces without a Provincial Plan, and the previously calculated 0.37% rate of premium reduction for residents of a province with a Provincial Plan :

For 2010, the Employment Insurance premium rate for residents of provinces with a Provincial Plan is set at 1.36%.

Which is the rate of 1.73% for residents of provinces without a Provincial Plan minus the rate of premium reduction of 0.37% for residents of a province with a Provincial Plan.

On the expenditure side, the above break-even rates take into account all Budget 2009 measures and the new legislation recently introduced by the Government that would temporarily provide additional Employment Insurance regular benefits to unemployed long-tenured workers.

However, on the revenue side these rates do not reflect section 223 of Budget 2009 which states that there will be credited to the Employment Insurance Account the amount determined by the Minister of Finance that corresponds to the cost of the benefit enhancement measures as per Budget 2009. Taking into account the anticipated reimbursement of the 2010 portion of Budget 2009, the break-even rate for 2010 would have been 2.30% for residents of provinces without a Provincial Plan and 1.93% for residents of provinces with a Provincial Plan.

Furthermore, in regards to the maximum insurable earnings and in accordance with the indexation formula of section 4 of the Act :

For 2010, the employment insurance annual maximum insurable earnings is set at $43,200.

For 2009, the annual maximum insurable earnings was $42,300.

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