By Andrew Jackson
Progressive Economics Forum
December 31st, 2011
Amidst the plethora of media reports on “payroll tax” increases for 2012, there was little mention of increases in benefits.
There are, of course, two sides to social insurance programs.
Starting in January, CPP benefits – indexed to inflation – rise by 2.8% to a new monthly maximum of $986.67. (You can’t say that about far too many defined benefit pension plans, and there is no inflation indexing of other pensions.)
Reflecting the rise in maximum insurable earnings, the maximum weekly EI benefit goes from $468 to $485 per month.
The amount of earnings replaced by both EI and CPP will increase, giving rise to a premium increase in non inflation adjusted dollar terms. But, by the same token, there will be no fall in the real amount of income replaced by EI and CPP benefits during a spell of unemployment or when retiring.
Meanwhile, CPP premiums are unchanged as a percentage of earnings, and the employee EI premium contribution rate is up by an eye watering 5 cents per week per $100 of earnings.
I wonder why the mainstream media highlighted only the cost as opposed to the benefits of these programs?