From the what-I-learned-at-work-yesterday department:
EI break-even plan could cause wild swings in premiums: expert
OTTAWA – Proposed changes to Canada's employment insurance system could leave it short billions of dollars if the economy takes a turn for the worse, a deficit that workers and employers would have to make up for with sharply increased premiums, says a former chief actuary for the fund.
Michel Bedard, who was chief actuary for the federal employment insurance fund through much of the 1990s, says new rules proposed by the Conservative government ostensibly designed to eliminate the accumulation of billions of dollars of surpluses could, in fact, leave the EI fund billions short….[Read the full story]
Bedard was speaking yesterday for the Canadian Institute of Actuaries to the House of Commons Standing Committee on Finance. This is a big deal for the actuaries and they've done a lot of work — on behalf of the Canadian public — on this issue.
First of all there is no account with the EI funds contributed by employees and employers. It is a notional account only and the funds go into the consolidate revenue fund of the government. So for the NDP to scream that the Liberals and the Conservatives stole the EI surplus is disingenuous to say the least.
The money was used by the Liberals to help balance the books back in the mid 90's but since that time there has been more collected than paid out.
I confess I don't know whether the plan put forward by the Conservatives will work or not. However, there is always a chance no matter what the “notional” surplus is that there could be times where premiums would have to go up. God knows they skyrocketed under the Liberals.
At least the Conservatives are trying to change the Liberal system and if it works fine then employees and employers will be subjected to lower premiums. However, if the economy is in trouble and we need higher premiums then that's the way it will have to be. However, charging employees and employers exhorbitant premiums in the event something might happen does not make a lot of sense.