The EI expenditures over the next 7 years are equal to the sum of the revenues over the same period and the EI Operating Account’s balance as of 31 December 2019.
The EI expenditures on the left side of the equation are expressed as the sum of the direct program expenditures, the amount of reduction in the employer premiums due to qualified wage-loss plans, the amount of reduction in employee and employer premiums due to provincial plans and the small business premium rebate that will offset costs of the new EI Training Support Benefit proposed in Budget 2019 and expected to launch in late 2020.
The EI revenues on the right side of the equation represent the sum of employer premiums paid on behalf of salaried employees (prior to reductions for wage-loss plans, provincial plans and the small business premium rebate), salaried employee premiums (net of employee refunds prior to reductions for provincial plans) and employee premiums for self–employed (prior to reductions for provincial plans).
The employer premiums paid on behalf of salaried employees (prior to reductions for wage-loss plans, provincial plans and the small business premium rebate) are equal to 1.4 multiplied by the rate and the total insurable earnings for salaried employees prior to adjustments for employee premium refunds (referred to as TIE).
The salaried employee premiums (net of employee refunds prior to reductions for provincial plans) are equal to the product of the rate, the TIE and (1 minus the average adjustment over the next 7 years to reflect employee premium refunds, expressed as a percentage of TIE).
The employee premiums for self-employed (prior to reductions for provincial plans) are calculated by multiplying the rate by the total self-employed earnings over the next 7 years for individuals who opted into the EI program.
The resulting 7-year forecast break-even rate is equal to the ratio of the sum over the next 7 years of the direct program expenditures, the amount of reduction in employer premiums due to qualified wage-loss plans, the amount of reduction in employee and employer premiums due to the provincial plans and the small business premium rebate that will offset costs of the new EI Training Support Benefit proposed in Budget 2019 and expected to launch in late 2020 net of the EI Operating Account’s balance as of 31 December 2019 over the earnings base of residents of all provinces over the next 7 years.
The earnings base of residents of all provinces over the next 7 years is calculated as:
1.4 times the TIE, plus the TIE times (1 minus the adjustment to reflect employee premium refunds which is expressed as a percentage of TIE) plus the total self-employed earnings for individuals who opted into the EI program.
Return to the report