EI premiums increase for 2011 • Canadians living paycheque to paycheque • Funding review of WSIB • Canada’s millionaires concerned about next generation’s financial future
OTTAWA — In late September, finance minister Jim Flaherty announced the federal government was going to limit increases in employment insurance (EI) premiums as part of its plan to support the economic recovery. The increase in EI premiums for 2011 will be limited to five cents per $100 of insurable earnings (two-thirds less than the recommended 15 cent increase) and 10 cents for subsequent years. “At a time when every dollar counts to individual families, this could mean almost $75 extra in the budget of the average Canadian family next year,” said Flaherty. “Canada-wide, it will amount to $1.2 billion back in the pockets of workers and job creators.” Under the new limit, the employee rate per $100 of insurable earnings can rise to no higher than $1.78, starting Jan. 1, 2011. Employers contribute 1.4 times the employee’s premiums. The government will also undertake consultations with individuals and businesses on how the EI rate-setting mechanism can be further improved to ensure more stable, predictable rates going forward. The government froze EI premiums in 2009 and 2010 at $1.73 per $100 — their lowest level since 1982 — as part of its economic stimulus measures.
Canadians living paycheque to paycheque
TORONTO — The second annual National Payroll Week employee survey, conducted by the Canadian Payroll Association (CPA), found employees are not saving enough and are concerned about the economy. The survey found:
•The majority of Canadian workers continue to live paycheque to paycheque, with 59 per cent saying they would be in financial difficulty if their paycheque was delayed by a week.
•Sixty-two percent of respondents expect a salary increase but the the vast majority (83 per cent) also expect their cost of living will increase in the next 12 months.
•Almost half (47 per cent) are saving only five per cent or less of their net pay. Financial planning experts generally recommend a retirement savings rate of about 10 per cent of net pay.
•The overwhelming majority (81 per cent) say their first priority if they were to win $1 million from a lottery would be to pay off their debt.
•While 59 per cent feel the economy in their city or town will improve in the next year, this was down from 67 per cent in 2009. Workers in Ontario, Quebec and the Atlantic provinces are less confident about their local economies.
•Two in three working Canadians (69 per cent) say it would be difficult to find comparable employment with a similar salary if they lost their job.
•Cash is still king for Canadians when it comes to remuneration with 61 per cent of those who responded saying receiving higher wages from their employer is most important, significantly outpolling other choices of better retirement benefits (20 per cent), more health benefits (13 per cent) and education funding (six per cent).
•Almost three-quarters of generation Y (ages 18-34) are looking for better wages (a five per cent increase from 2009); while almost 40 per cent of baby boomers (ages 55-65) favoured more retirement benefits.
Funding review of WSIB
TORONTO — Ontario has approved a request from the board of directors of the Workplace Safety and Insurance Board (WSIB) to appoint respected academic and labour expert Harry Arthurs to chair the WSIB's funding review. Arthurs will consult with workers, labour groups and employers to inform the WSIB on a strategy to eliminate the unfunded liability by setting and achieving targets and timeliness for full funding. The goal is to create a stable and sustainable system of compensation for injured workers in Ontario. In support of this objective, Ontario also intends to introduce legislation that would require the WSIB to be fully funded as well as clarify and strengthen the independence of the WSIB as an arms length agency. If passed, the legislation would require the long-term elimination of the WSIB's unfunded liability to ensure fair benefits for workers and the eventual reduction of employer insurance premiums. A fully funded model, and how that is defined, would be required on a date set in regulation and would be informed by the results of the WSIB consultation. Six of Canada's provinces now have fully funded models of compensation, with five of them required by legislation to be fully funded. The legislation would, if passed, address issues raised in the 2009 annual report of the auditor general of Ontario. While the WSIB's consultations are ongoing, the government has approved inflation adjustments of 0.5 percent in 2011 and again in 2012 for more than 150,000 partially-disabled workers.
Canada’s millionaires concerned about next generation’s financial future
TORONTO — Fifty-eight percent of Canada’s millionaires believe their children will have a more difficult time making it financially than they did, according to new research by Royal Bank of Canada Wealth Management. Furthermore, almost one-half of the 400 adults with investable assets of at least $1 million surveyed are concerned about their children's readiness to successfully manage a potential inheritance and one-third believe their children are too focused on the short term and may take wealth for granted. More than one-half of Canadian millionaires — and 67 per cent of those with assets of more than $5 million — feel a responsibility to preserve wealth for future generations. At the same time, many have not yet made any formal efforts to ensure the successful transfer of their assets: 39 per cent do not have an estate plan in place and 22 per cent have not even considered getting one. When asked about the critical factors to their financial success, 60 per cent of Canadian millionaires cite a diligent focus on long-term financial security, 54 per cent note a strong influence of parents or grandparents in instilling the value of a dollar and more than one-quarter acknowledge luck, an entrepreneurial spirit and a strong investment advisor relationship.
