Saturday, December 31, 2011

Social Insurance Benefits Increase Tomorrow!

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?

1 comment:

  1. It's good to see some discussion of this critical issue.

    I looked for a political solution for this and found that in Saskatchewan only the SDAP was offering to address this issue in 2015 as a political issue.

    It seems that a lot of people who supported other parties are moving to the SDAP because they are promising real reform and not just talking about it which is much of the problem of other parties in Saskatchewan.

    Great coverage of an important shortfall by the Fed/Prov Governments who are wallowing in their $2000 wage increases paid for by tax payers.