The employment insurance (EI) contribution rate will be reduced to $1.95 from its current level of $1.98 per $100 of insurable earnings, effective January 1, Minister of Finance Ralph Goodale announced today.

“Today’s announcement represents the 11th consecutive reduction in the EI premium rate since 1994, when the rate was $3.07. As a result of these rate reductions, employers and employees will pay $10.5 billion less in premiums in 2005 than they would have paid under the 1994 rate,” Goodale said.

This year’s premium rate, compared to the 1994 rate, represents a savings of $485 for employees who make maximum contributions.

Today’s announcement also included a reduction in the rate paid by employers to $2.73 from $2.77 per $100 of insurable earnings, also effective January 1, 2005. Maximum insurable earnings will remain at $39,000 for 2005.