ARCHIVED - RPP 2007-2008
Human Resources and Social Development Canada

• Previous Page
• Table of Contents
• Next Page

This page has been archived.

Section III

Supplementary Information

---

Specified Purpose Accounts

Introduction to Specified Purpose Accounts

Specified Purpose Accounts consist of special categories of revenues and expenditures. They report transactions of certain accounts where enabling legislation requires that revenues be earmarked and that related payments and expenditures be charged against such revenues. The transactions of these accounts are to be accounted for separately.

HRSDC is responsible for the stewardship of four such accounts:

• the Employment Insurance Account;
• the Canada Pension Plan;
• the Government Annuities Account; and
• the Civil Service Insurance Fund.

The Employment Insurance Account is a consolidated Specified Purpose Accounts and is included in the financial reporting of the Government of Canada. Consolidated Specified Purpose Accounts are used principally where the activities are similar in nature to departmental activities and the transactions do not represent liabilities to third parties but, in essence, constitute Government revenues and expenditures.

The Canada Pension Plan is a Specified Purpose Accounts but is not consolidated as part of the Government of Canada financial statements. It is under joint control of the Government and participating provinces. As administrator, the Government's authority to spend is limited to the balance of the Plan.

The Government Annuities Account is a consolidated Specified Purpose Accounts and is included in the financial reporting of the Government of Canada. It was established by the Government Annuities Act, and modified by the Government Annuities Improvement Act, which discontinued sales of annuities in 1975. The account is valued on an actuarial basis each year, with the deficit or surplus charged or credited to the Consolidated Revenue Fund.

The Civil Service Insurance Fund is a consolidated Specified Purpose Accounts and is included in the financial reporting of the Government of Canada. It was established by the Civil Service Insurance Act. Pursuant to subsection 16(3) of the Civil Service Insurance Regulations, the amount of actuarial deficits is transferred from the Consolidated Revenue Fund to the Civil Service Insurance Account in order to balance the assets and liabilities of the program.

Employment Insurance Account

Description

The Employment Insurance Account was established in the Accounts of Canada by the Employment Insurance Act to record all amounts received or paid out under that Act. The Employment Insurance Act provides short-term financial relief and other assistance to eligible workers. The program covers all workers in an employer-employee relationship. Self-employed fishers are also included under special regulation of the Employment Insurance Act.

Employment Insurance provides:

• Income Benefits under Part I of the Employment Insurance Act provide temporary income support to claimants, including self-employed fishers, while they look for work. This includes work-sharing agreements for temporary work shortages to allow employees to receive pro-rated Employment Insurance benefits while working for part of a week, thus avoiding layoffs. Employment Insurance also provides four types of special benefits: maternity benefits, payable to biological mothers for work missed as a result of pregnancy and childbirth; parental benefits, payable to both biological and adoptive parents for the purpose of caring for a new born or adopted child; sickness benefits, payable to claimants who are too ill to work; and compassionate care benefits, payable to claimants who provide care to a gravely ill or dying family member.

• Employment Benefits under Part II of the Employment Insurance Act through a set of Employment Benefits and Support Measures that can be tailored to meet the needs of individuals and local circumstances. The Government of Canada has Labour Market Development Agreements with the governments of the provinces and territories. These enable provincial and territorial governments to assume direct responsibility for the design and delivery of these benefits or to take part in co-management arrangements with the federal government.

Employers and workers pay all costs associated with Employment Insurance through premiums. Benefits and administrative costs are paid out of the Consolidated Revenue Fund and charged to the Employment Insurance Account. A surplus in the Account generates notional interest at a rate established by the Minister of Finance, which is currently set at 90% of the monthly average of the three-month Treasury bill rate.

Financial Summary

The Employment Insurance premium rate for the calendar year 2007 was set on an expected break-even basis on November 6, 2006 by the Employment Insurance Commission in accordance with the Employment Insurance Act. The 2007 - 2008 total revenues of $16.6 billion forecasted during Fall 2006 are expected to correspond to the costs of $16.6 billion also forecasted in Fall 2006.

The following chart summarizes trends in total costs and revenues of the Employment Insurance Account from 1998 - 1999 to 2007 - 2008.

The table below summarizes the Employment Insurance premiums and expenditures from 2004 - 2005 financial results to 2007 - 2008.

EI Account

Summary - Premiums and Expenditures
	Actual		Forecast	Forecast a As of Oct 13, 2006
(millions of dollars)	2004-2005	2005-2006	2006-2007	2007-2008
Expenditures
EI Benefits
Income Benefits	12,681	12,402	12,028	12,752
EBSM	2,067	2,016	2,138	2,177
Total EI Benefits	14,748	14,418	14,166	14,928
Administrative Costs	1,542	1,576	1,631	1,614
Doubtful Accounts	95	56	55	57
Sub-Total	16,385	16,050	15,851	16,599
EI Premiums and Penalties
Premium Revenue	17,655	16,917	17,383	16,554
Penalties	51	50	60	45
Sub-Total	17,706	16,967	17,443	16,599
Variance	1,321	917	1,592	-
a Forecasts are as of October 13, 2006 when the Chief Actuary submitted his report on the premium rate to the Employment Insurance Commission. Notes 1 The Employment Insurance premiums reported in the summary financial statements of the Government of Canada exclude the premium contributions made by the Government of Canada as an employer. 2 Totals may not add due to rounding.

Benefit Payments

Benefits in 2007 - 2008 are expected to reach $14.8 billion ¹⁸, consisting of $12.6 billion for Income Benefits and $2.1 billion for Employment Benefits and Support Measures.

Income Benefits

Employment Insurance Income Benefits include regular, special, work-sharing and fishers' benefits.¹⁹ Major aspects of these benefits are as follows.

Regular Benefits

Entrance Requirements to Qualify for Benefits

• Most claimants require 420 to 700 hours of work during their qualifying period, from full-time or part-time work, whether with one employer or several. The exact number of hours required, called the "variable entrance requirement", is determined by the rate of unemployment in a claimant's region at the time he or she applies for Benefits. In general, the higher the rate of unemployment, the fewer hours of work required to qualify.

• People who have just entered the labour market ("new entrants") and those returning to the labour force after an absence ("re-entrants") require 910 hours of work. However, if they worked at least 490 hours in the preceding 12 months, or received at least one week of maternity or parental benefits in the four years before that, they will be eligible under normal rules the following year.

Determining the Benefit Rate and Entitlement

• Claimants for regular benefits may receive benefits for 14 to 45 weeks, depending upon their hours of insurable employment and the regional unemployment rate.
• Claimants' weekly benefits are 55% of their average insurable earnings during the last 26 weeks, up to a maximum of $423, based on the maximum yearly insurable earnings of $40,000. The average insurable earnings are based on the actual weeks of work, subject to a minimum divisor that is tied to the regional rate of unemployment.
• Claimants with a combined family income of less than $25,921 and who qualify for the Canada Child Tax Benefit receive a Family Supplement based upon:
  • the net family income;
  • the number of dependent children; and
  • the ages of those dependent children.
• The benefit rate for claimants who receive a Family Supplement can be increased to a maximum of 80% of the claimant's average weekly insurable earnings, up to the maximum weekly benefit of $423.

Special Benefits

Claims for sickness, maternity, parental, or compassionate care benefits require 600 hours of work, and are not affected by the new entrant/re-entrant rule. All claimants may receive sickness benefits for up to 15 weeks. Parental benefits of 35 weeks are available for biological and adoptive parents in addition to the 15 weeks of maternity benefits available to biological mothers. Compassionate care benefits of up to 6 weeks are available to eligible workers who take a temporary absence from work to provide care for a gravely ill family member who has a significant risk of death within a 26 week period.

On March 1, 2005 the Government of Canada and the Government of Quebec signed the final agreement on Quebec Parental Insurance Plan. As of January 2006, Quebec residents claim maternity and parental benefits from the Quebec provincial government.

Work Sharing

Claimants may receive benefits while on work-sharing agreements. These agreements between HRSDC, employees and employers avoid temporary layoffs by combining partial Employment Insurance benefits with reduced workweeks. They normally last from 6 to 26 weeks.

Fishers' benefits

The benefit rate for claims for fishers' benefits depend on the earnings from fishing and the regional rate of unemployment, via the minimum divisor. All fisher claims have a 31-week maximum qualifying period and a fixed entitlement of 26 weeks of benefits. These can be claimed from October 1^st to June 15^th for summer fishers' benefits and April 1^st to December 15^th for winter fishers' benefits. Fishers can file claims for both seasons.

Benefit Repayments

When the net annual income of Employment Insurance claimants exceeds 1.25 times the maximum yearly insurable earnings ("the repayment threshold"), they have to repay the lesser of 30% ("the repayment rate") of the net excess income or 30% of the amount of total benefits other than special benefits paid. In addition, first-time claimants of regular or fishing benefits are exempt from benefit repayment.

EI Income Benefits

Expenditures
	Actual		Forecast	Planned Spending
(millions of dollars)	2004-2005	2005-2006	2006-2007	2007-2008
Income Benefits
Regular	8,669	8,411	8,472	8,927
Sickness	797	835	895	940
Maternity	925	903	775	808
Parental	2,112	2,064	1,765	1,837
Compassionate Care	7	8	10	12
Fishing	313	285	266	276
Work Sharing	11	13	9	15
Benefit Repayments	(153)	(117)	(164)	(174)
Total Income Benefits	12,681	12,402	12,028	12,641
Note: Totals may not add due to rounding.

 

Factors Affecting Income benefits

	Actual		Forecast	Planned Spending	%
(millions of dollars)	2004-2005	2005-2006	2006-2007	2007-2008	Change
Income Benefits ($ million)	12,681	12,402	12,028	12,641	5.1%
Average Monthly Beneficiaries(000's)	819	788	737	755	2.4%
Benefit Rate($/Week)	299	302	314	322	2.5%

Employment benefits and Support Measures

The Employment benefits include Skills Development, Job Creation Partnerships, Self-Employment and Targeted Wage Subsidies.

The Support Measures include Employment Assistance Services, Labour Market Partnerships and Research and Innovation.

Part II of the Employment Insurance Act also authorizes the federal government to make payments to the governments of the provinces and territories for implementing programs similar to Employment benefits and Support Measures. The planned federal contribution to provinces and territories (i.e., New Brunswick, Quebec, Ontario, Manitoba, Saskatchewan, Alberta, Northwest Territories and Nunavut) under Labour Market Development Agreements is $1,418 million for 2007 - 2008.

The total planned spending for Employment benefits and Support Measures in 2007 - 2008 is set at $2,143 million.

Employment benefits and Support Measures

	Actual		Forecast	Planned Spendinga
(millions of dollars)	2004-2005	2005-2006	2006-2007	2007-2008
Job Creation Partnerships	71	54	50
Skills Development	429	410	384
Self-Employment	115	107	792
Targeted Wage Subsidies	48	42	39
Employment Assistance	324	322	290
Labour Market Partnerships	173	177	169
Research and Innovation	17	15	43
Total HRSDC Programs	1,176	1,127	1,067	725
Transfers to Provinces and Territories	891	889	1,071	1,418
Total	2,067	2,016	2,138	2,143
a Breakdown by component is not available, as spending will be guided by local labour market needs. Breakdown by provinces/territories is provided in the EI Part II - 2007 - 2008 Expenditure Plan. Note: Totals may not add due to rounding.

Premiums

Premiums are collected from insured employees and their employers to cover the program costs over a business cycle, based on a yearly premium rate and employees' insurable earnings. The factors affecting the premiums are further explained below.

Premium Rate

Under the current rate-setting process, the Chief Actuary is required to annually calculate, on a forward-looking basis, the estimated break-even rate for the coming year based on the most current forecast values of the relevant economic variables provided by the Minister of Finance. The forward-looking basis means that past surpluses, defi cits, and the notional interest credited to the Employment Insurance Account do not enter into the calculation of the "break-even" premium rate. For 2007, the Commission set the employee rate at 1.80% of insurable earnings, a reduction from the 2006 rate of 1.87%. The corresponding employer rate is 2.52%, a reduction from 2.62% in 2006.

Maximum Yearly Insurable Earnings

Premiums are paid on all employment earnings of insured employees up to the Maximum Yearly Insurable Earnings. The Chief Actuary has calculated the Maximum Yearly Insurable Earnings for 2007 as being $40,000, up $1,000 from the 2006 level. The Maximum Yearly Insurable Earnings had been set at $39,000 until the average wage in Canada caught up to it, which has now happened. Maximum Yearly Insurable Earnings will now grow with Canada's projected average annual earnings.

Premium Reduction

Employers with qualifi ed wage-loss insurance plans are entitled to premium reductions. They are required to share this reduction with their employees.

Additionally, due to Quebec Parental Insurance Plan, the premium rate for employees in Quebec will be reduced to 1.46% in 2007 and the corresponding rate for employers to 2.04%.

Premium Refund

• Workers with annual earnings of $2,000 or less can receive a refund of their Employment Insurance premiums through the income tax system.

Employment Insurance premiums are refunded to employees when their insurable earnings are in excess of the maximum yearly insurable earnings.

Interest Earned

Section 76 of the Employment Insurance Act stipulates that the Minister of Finance may authorize the payment of interest on the balance in the Employment Insurance Account in accordance with such terms and conditions and at such rates as the Minister of Finance may establish, and the interest, which is currently set at 90% of the three-month Treasury bill rate, shall be credited to the Employment Insurance Account and charged to the Consolidated Revenue Fund. Interest is calculated monthly, based on the 30-day average of the daily balance in the Account.

Interest is charged on overdue accounts receivable, caused through isrepresentation, in accordance with Treasury Board regulations. The interest rate used in this calculation is the average Bank of Canada discount rate for the previous month plus 3.0%.Interest earned is expected to increase slightly to $2.0 billion despite lower expected interest rates for 2007 - 2008 due to the higher cumulative surplus, which totalled $50.8 billion as of March 31, 2006.

Interest Earned

	Actual		Forecast	Planned Spending
(millions of dollars)	2004-2005	2005-2006	2006-2007	2007-2008
Sources
Account Balance	968	1,324	1,932	1,961
Accounts Receivable	27	28	34	36
Total	995	1,352	1,966	1,997

Administrative Costs

Section 77 of the Employment Insurance Act specifies that the costs of administering the Act are to be charged to the Employment Insurance Account.

The Minister of Human Resources and Social Development is responsible for reporting on the Employment Insurance Program to Parliament. However, the Canada Revenue Agency, which collects premiums and benefit repayments and provides decisions on insurability under the Act, shares the administration of the Program. Treasury Board Secretariat and the Department of Justice all supply services that support management and delivery of programs under the Employment Insurance Act.

The administrative costs that provincial and territorial governments incur to administer Employment benefits and Support Measures under the Labour Market Development Agreements are also charged to the Employment Insurance Account.

The $1,581 million Employment Insurance administrative costs are the initial approved resources for 2007 - 2008, which is less than the final spending authority for 2006 - 2007.

Administrative Costs

	Actual		Forecast	Planned Spending
(millions of dollars)	2004-2005	2005-2006	2006-2007	2007-2008
Sources
Federal	1,458	1,494	1,526	1,438
Provincial	92	92	112	156
Recovery	(8)	(9)	(8)	(12)
Total	1,542	1,576	1,631	1,581
Note: Totals may not add due to rounding.

Canada Pension Plan

Description

The Canada Pension Plan is a contributory, earnings-related social insurance program. It is a joint federal-provincial plan that operates throughout Canada, except in Quebec, which has its own comparable plan. The Canada Pension Plan provides for a variety of benefits based on life changes. Best known for its retirement pensions, the Canada Pension Plan also provides benefits for surviving partners and children of Canada Pension Plan contributors, persons with disabilities and their children, and a one-time maximum benefit of up to $2,500 in the event of the death of a contributor.

As a contributory plan, contributors are employees or self-employed persons generally between the ages of 18 and 70, who earn at least a minimum amount ($3,500) during a calendar year. benefits are calculated based on how much and for how long a contributor has paid into the Canada Pension Plan. benefits are not paid automatically - everyone must apply and provide proof of eligibility.

Approximately 12 million Canadians over the age of 18 currently contribute annually to the Plan and approximately 4.2 million Canadians will receive benefits during 2007 - 2008.

Benefit Payments

Retirement Pensions

Contributors may begin receiving Canada Pension Plan retirement pensions as early as age 60 or delay eceipt until age 70. Applicants who are between 60 and 65 must have stopped working or earn below a specified level when they begin to receive the retirement pension. Once that person starts receiving the Canada Pension Plan pension, he/she can earn any amount without affecting the Canada Pension Plan pension. However, contributions are not made to the Canada Pension Plan on any future earnings. Contributors over age 65 need not have stopped working to qualify.

The amount of each contributor's pension depends on how much and for how long he/she has contributed and at what age he/she begins to draw the benefits. Pensions are adjusted by 0.5 percent for each month before or after age 65 from the time a person begins to receive his/her pension. Contributors who begin receiving a retirement pension at age 60 will receive 70% of the amount that would otherwise be payable at age 65, while those who delay receiving a pension until age 70 will receive 130% of the amount payable at age 65.

Spouses and common-law partners who are at least 60 years of age can share their retirement benefits earned during the period of cohabitation as long as they remain together. This may result in tax savings. If only one spouse is a Canada Pension Plan contributor, the pension can be shared between the two spouses. The overall benefits paid do not increase or decrease with pension sharing.

Disability benefits

Disability benefits are payable to contributors who meet the minimum contributory requirements and whose disability is "severe and prolonged", as defined in the legislation. Such a disability would prevent them from working regularly at any job in a substantially gainful manner for a prolonged period of time. In order to ensure that benefits are only paid to eligible beneficiaries, periodic reassessments are carried out. Support is also provided to clients who try to return to regular gainful employment. Children of Canada Pension Plan - disability beneficiaries are also eligible for a flat rate monthly benefit up to the age of 18, or up to age 25 if attending school full-time. As of December 2006, there were just over 305,000 beneficiaries and 89,000 children receiving monthly benefits.

CPP benefit Payments by Category and Type

(millions of dollars)	Actual		Forecast	Planned Spending
	2004-2005	2005-2006	2006-2007	2007-2008
Retirement pensions	16,795	17,664	18,657	19,693
Disability benefits
Disability pensions	2,921	3,105	3,165	3,345
Benefits to children of disabled contributors	257	268	272	279
Disability benefits total	3,178	3,373	3,437	3,624
Survivor benefits
Surviving spouse or common law partner's benefits	3,327	3,459	3,554	3,664
Orphans' benefits	215	218	220	224
Death benefits	248	263	268	275
Survivor benefits total	3,790	3,940	4,042	4,163
TOTAL	23,763	24,977	26,136	27,480

Survivor's benefits

A contributor's surviving spouse/common-law partner may be eligible for a monthly benefit if the contributor has contributed for a minimum period and, if at the time of the contributor's death, the spouse/common-law partner was at least 35 years old or was under age 35 and either had dependent children or was disabled. Payments continue in the event that the surviving spouse/common-law partner remarries. Monthly benefits are also payable on behalf of the children of Canada Pension Plan contributors who die. The amount is a flat rate and is payable until the child reaches age 18, or up to age 25 if he or she attends school full time. A lump-sum benefit is also available to the estate of the deceased contributor provided the minimum contributory requirements have been met.

Determining the benefit Rate

Canada Pension Plan benefits are largely related to earnings. Benefits are adjusted in January of each year to reflect increases in the average cost of living, as measured by the Consumer Price Index. Benefits such as children's benefits are not based on earnings; they are a fixed amount. Disability and survivor benefits contain a fixed-rate or flat rate portion in addition to an earnings-related portion.

Administrative Expenses

Human Resources and Social Development Canada, Finance Canada, the Canada Revenue Agency, Public Works and Government Services Canada, the Royal Canadian Mounted Police and the Office of the Superintendent of Financial Institutions supply services that support the management and delivery of the Canada Pension Plan.

Costs incurred by these departments and agencies in administering the Plan are recoverable from the Account based on the costing principles approved by Treasury Board. Essentially, those principles are that costs must be incurred because of Canada Pension Plan responsibilities and must be traceable. Administrative expenses for 2007 - 2008 are estimated at $402.2 million, representing a decrease of 2.9% from the forecast for 2006 - 2007.

Benefits delivery staff and processes are extremely efficient in getting benefits into the hands of Canada Pension Plan contributors. In 2006 - 2007, the total cost for administering and delivering Canada Pension Plan benefits is approximately 1.6% of the total forecasted benefit payments.

CPP Administrative Expenses by Department

(millions of dollars)	Actual		Forecast	Spending
	2004-2005	2005-2006	2006-2007	2007-2008
Social Development Canada
Plan administration, operations, records and accommodation	224.0	240.5	-	-
Human Resources and Skills Development Canada In-person services for applicants and beneficiarie	6.6	15.3	-	-
Human Resources and Social Development Canada
Plan administration, operations, records and accommodation	-	-	262.8	249.2
EI Account- Refunding of EI Account in relation to assignment of Social Insurance numbers and maintenance of the central index	2.7	3.3	3.0	4.2
Treasury Board Secretariat
Insurance premiums and recoverable contributions to the Employee Benefit Plan	39.0	30.1	29.0	27.5
Public Works and Government Services
Cheque issue, EDP services	15.8	16.1	15.2	15.6
Royal Canadian Mounted Police
Investigation of contraventions	-	0.3	0.3	0.3
Canada Revenue Agency
Collection of contributions	96.5	100.8	102.1	103.2
Office of the Superintendent of Financial Institutions
Actuarial services	1.3	1.4	1.5	1.9
Finance
Investment services	0.4	0.4	0.3	0.3
TOTAL	386.4	408.3	414.2	402.2

Revenues

The Canada Pension Plan is financed through mandatory contributions from employees, employers and self-employed persons, as well as from investment income. Contributions are paid on the portion of a person's earnings that falls between a specified minimum (the Year's Basic Exemption) and maximum (the Year's Maximum Pensionable Earnings) amounts. The minimum remains constant at $3,500, while the maximum amount is linked to the average Canadian industrial wage and is adjusted annually.

No contributions are made once a contributor begins to receive a Canada Pension Plan retirement pension, while receiving a disability pension or reaches the age of 70. Disbursements include the payment of Canada Pension Plan benefits and administrative expenditures associated with managing the program.

When it was introduced in 1966, the Canada Pension Plan was designed as a pay-as-you-go plan, with a small reserve. This meant that the benefits for one generation would be paid largely from the contributions of later generations. However, demographic and economic developments and changes to benefits in the 30 years that followed resulted in significantly higher costs. It became clear that to continue to finance the program on a pay-as-you-go basis would have meant imposing a high financial burden on Canadians in the work force during those years. Plan administrators chose instead to change the funding approach of the Plan to a hybrid of pay-as-you-go and full-funding.

In 1998, the federal and provincial governments introduced "steady-state" financing. Under steady-state financing, the contribution rate was increased incrementally, from 5.6% in 1996, to 9.9% in 2003, and remains at that rate. The Office of the Superintendent of Financial Institutions' 21^st Actuarial Report on the sustainability of the Canada Pension Plan states that the actual steady-state contribution rate is 9.8% of contributory earnings. This rate represents the lowest rate sufficient to sustain the Plan without further increase and is 0.1% lower than the legislated 9.9% contribution rate. With the 9.9% legislated contribution rate, the assets are expected to increase significantly over the next 17 years, with the ratio of assets to the following year's expenditures growing from 3.1 in 2004 to 5.6 by 2021.²⁰

This approach will generate a level of contributions between 2001 and 2021 that exceeds the benefits paid out every year during that period. Funds not immediately required to pay benefits are transferred to the Canada Pension Plan Investment Board for investment in financial markets. Over time, this will create a large enough reserve to help pay the costs that are expected as more and more baby-boomers retire.

Adoption of this diversified funding approach has made the Canadian retirement income system less vulnerable to changes in economic and demographic conditions and a leading edge example of public pension plan management in the world.

Investment Income

Income is earned on the investments in equities, real estate and money market securities as well as interest earned by bonds.

Financial Accountability

The Canada Pension Plan and its resources are divided among three components:

• The Canada Pension Plan Account was established to record the contributions, interest, pensions and benefits and administrative expenditures of the Plan. In September 2004, the Operating Reserve²¹ in the Canada Pension Plan Account began to be transferred to the Canada Pension Plan Investment Board and was completed in August 2005. As well, since September 2004, the Canada Pension Plan Investment Board receives any excess funds not needed to pay for Canada Pension Plan benefits and expenses based on weekly, monthly and 6-month forecasts generated by the Canada Pension Plan Accounting personnel.
• The Canada Pension Plan Investment Fund was established to record investments in the securities of the provinces, territories and Canada. Following the adoption of Bill C-3 in April 2004, the Canada Pension Plan Investment Fund will gradually be transferred to the Canada Pension Plan Investment Board over a period of 3 years. The transfer of the Canada Pension Plan Investment Fund started May 1, 2004 and will end on April 1, 2007. On that day, the Canada Pension Plan Investment Fund will cease to exist.
• The Canada Pension Plan Investment Board is an arm's length Crown Corporation established by an Act of Parliament in December 1997. It began operations in March 1999 to help the Canada Pension Plan achieve steady-state funding by investing funds not required by the Canada Pension Plan to pay current pensions and earning investment returns on funds transferred from the Canada Pension Plan Account.²² The Board is accountable to the public and governments through regular reports. It is subject to broadly the same investment rules as other pension funds in Canada.

Financial Summary

Benefit payments are expected to reach $27.5 billion in 2007 - 2008, an increase of $1.4 billion or 5.1% over 2006 - 2007. This increase refl ects forecasts of client population and average benefit payments.

In 2007 - 2008, it is expected that there will be a net increase in client population of 3.4% and a net increase in average benefit payments of 1.7%.

The following table summarizes the financial results for the Canada Pension Plan from 2004 - 2005 to 2007-2008. In 2002-2003, the Government of Canada changed its basis of accounting from the modified accrual accounting to the full accrual basis of accounting. This change in accounting policy has been applied retroactively and the financial statements have been restated accordingly.

As well, following the adoption of Bill C-3 during 2003 - 2004, the evaluation of the provincial, territorial and federal bonds was changed from cost to fair value. The change in accounting policy has been applied retroactively and the financial statements have been restated to reflect this.

The Canada Pension Plan cumulative balance is expected to increase to approximately $112 billion by March 31, 2008. At present, the Canada Pension Plan has a fund equal to 4 times the benefits and this is expected to grow to about 5.6 times by 2021.

The following figures summarize trends in total revenues and expenditures of the Account and its status from 2004 - 2005 to 2007 - 2008.

CPP Summary

(millions of dollars)	Actual		Forecast	Planned Spending
	2004-2005	2005-2006	2006-2007	2007-2008
Revenue
Contributions	28,941	30,117	31,395	32,900
Investment Income
Canada Pension Plan	2,070	1,093	514	6
CPP Investment Board1	4,983	12,139	1,459	1,736
CPP Investment Fund2	(945)	(254)	N/A	-
Total Investment Income	6,108	12,978	1,973	1,742
Total Revenue	35,049	43,095	33,368	34,642
Expenditures
Benefit payments	23,763	24,977	26,136	27,480
Administrative expenses	386	408	414	402
Total Expenditures	24,149	25,385	26,550	27,882
Increase	10,900	17,710	6,818	6,760
Year-end balances	83,411	101,121	107,939	114,699
1 Canada Pension Plan Investment Board actual amounts are based on their audited financial statements. The CPP Investment Board invests mainly in equities. However, as at April 1, 2007, the bonds held in the Investment Fund will have been completely transferred. Therefore, the investment income will be made up of the interest from the bonds as well as the change in fair values of other varied equity investments as of that date. It is difficult to forecast a future fair value therefore the investment income for the year 2006 - 2007 and 2007 - 2008 only include the interest from the bonds held by the CPP Investment Board. 2 The Canada Pension Plan Investment Fund is made up of provincial, territorial and government bonds. Since March 31, 2004, these are valued at fair value. The revenue of the Fund is made up of the interest from the bonds as well as the change in fair values of these investments. The interest income from the Investment Fund is presented under "Canada Pension Plan" of this section. It is difficult to forecast a future fair value, therefore the investment income for the year 2006 - 2007 is not yet available. As at April 1, 2007, the Investment Fund will cease to exist as all the rights and titles of the bonds will have been transferred to the CPP Investment Board.

Long-Term Forecast

The Canada Pension Plan legislation requires a schedule of contribution rates with a review every three years by the federal and provincial finance ministers. The review determines whether any adjustments to the schedule are necessary. If so, the adjustments are implemented through legislation or agreement among finance ministers, or automatically under a formula that ensures that the contribution rate will be sufficient to sustain the Plan in the face of an aging population. Amendments to the rate schedule or the automatic regulation require the approval of at least two thirds of the provinces with at least two thirds of the population of all the provinces.

The table shows the forecast of revenues and expenditures affecting the Canada Pension Plan for the period between December 31, 2010 and December 31, 2035, based on the Office of the Superintendent of Financial Institutions' Actuarial Report (21^st) on the Canada Pension Plan as at December 31, 2003. The Assets/Expenditures Ratio reflects the size of the year-end assets relative to the expenditures.

Forecast of Revenues and Expenditures

Year	Contribution Rate %	Contributions	Investment Earnings	Expenditures	Assets at Dec. 31	Assets/Expenditure ratio
		$ millions
2010	9.90	36,128	8,982	31,868	146,795	4.37
2015	9.90	45,579	14,635	42,022	226,815	5.09
2020	9.90	57,537	21,497	56,253	332,116	5.57
2025	9.90	71,145	29,177	74,887	454,613	5.75
2030	9.90	88,011	37,958	97,015	591,404	5.81
2035	9.90	109,468	48,500	122,246	754,965	5.91
Source: 21st Actuarial Report from the Office of the Superintendent of Financial Institutions Canada.

Government Annuities Account

This account was established by the Government Annuities Act, and modified by the Government Annuities Improvement Act, which discontinued sales of annuities in 1975. The account is valued on an actuarial basis each year, with the deficit charged or surplus credited to the Consolidated Revenue Fund.

The purpose of the Government Annuities Act was to assist Canadians to provide for their later years, by the purchase of Government annuities. The Government Annuities Improvement Act increased the rate of return and flexibility of Government annuity contracts.

Income consists of premiums received, funds reclaimed from the Consolidated Revenue Fund for previously untraceable annuitants, earned interest and any transfer needed to cover the actuarial deficit. Payments and other charges represent matured annuities, the commuted value of death benefits, premium refunds and withdrawals, and actuarial surpluses and unclaimed items transferred to non-tax revenues. The amounts of unclaimed annuities, related to untraceable annuitants, are transferred to non-tax revenues.

As of March 31, 2006, there were 2,400 outstanding deferred annuities, the last of which will come into payment around 2030.

Government Annuities account Receipts and Disbursements

(millions of dollars)	Actual		Forecast	Planned Spending
	2004-2005	2005-2006	2006-2007	2007-2008
Expenditures Actuarial Liabilities - Balance at beginning of year	405.8	377.2	347.2	321.9
Income	26.3	24.5	24.3	22.5
Payments and other charges	54.6	51.0	47.9	45.0
Excess of Payments and other charges over income for the year	28.3	26.5	23.6	22.5
Actuarial Surplus	0.3	3.5	1.7	1.5
Actuarial Liabilities - Balance at year-end	377.2	347.2	321.9	297.9

Civil Service Insurance Fund

This account was established by the Civil Service Insurance Act, under which the Minister of Finance could contract with permanent employees in the public service for the payment of certain death benefits. No new contracts have been entered into since 1954 when the Supplementary Death benefit Plan for the Public Service and Canadian Forces was introduced as part of the Public Service Superannuation Act and the Canadian Forces Superannuation Act, respectively. As of April 1997, the Department of Human Resources Development assumed the responsibility for the administration and the actuarial valuation of the Civil Service Insurance Act.

The number of policies in force as of March 31, 2006 was 1,424 and the average age of the policy holders was 87.0 years. Receipts and other credits consist of premiums and an amount (charged to expenditures) which is transferred from the Consolidated Revenue Fund in order to balance the assets and actuarial liabilities of the program. Payments and other charges consist of death benefits, settlement annuities paid to beneficiaries and premium refunds.

Pursuant to subsection 16(3) of the Civil Service Insurance Regulations, any deficit will be credited to the Account from the Consolidated Revenue Fund.

Civil Service Insurance Fund Receipts and Disbursements

(millions of dollars)	Actual		Forecast	Planned Spending
	2004-2005	2005-2006	2006-2007	2007-2008
Revenue
Opening Balance	7.1	6.6	6.3	6.0
Receipts and other credits	0.0	0.1	0.1	0.1
Payments and other charges	0.5	0.4	0.4	0.3
Excess of payments and other charges over income for the year	0.5	0.3	0.3	0.2
Closing Balance	6.6	6.3	6.0	5.8

Employment Insurance Part II
2007-2008 Expenditure Plane

Background

Part II of the Employment Insurance Act commits the federal government to work in concert with provinces and territories in designing and implementing active employment programs that would be more effective in helping unemployed Canadians integrate into the labour market. These programs are called Employment benefits and Support Measures.

In accordance with the Government of Canada's 1996 offer to provinces and territories to enter into bilateral partnerships on labour market activities, Labour Market Development Agreements have been concluded with all the provinces and territories. The Labour Market Development Agreements involve two types of arrangements:

• Co-management agreements where Human Resources and Social Development Canada, formerly Human Resources and Skills Development Canada, and the province or territory jointly assume responsibility for the planning and design of Employment benefits and Support Measures, while HRSDC continues to deliver programs and services through its service delivery network. Such agreements have been concluded with Newfoundland and Labrador, Prince Edward Island, British Columbia and the Yukon. There is also a strategic partnership agreement that is a variation of co-management in Nova Scotia;
• Transfer agreements where the province or territory assumes responsibility for the design and delivery of active employment programs similar to Employment benefits and Support Measures. Such agreements have been concluded with New Brunswick, Quebec, Ontario, Manitoba, Saskatchewan, Alberta, the Northwest Territories and Nunavut. These similar programs are contributions under Section 63 of the Employment Insurance Act.

In addition to locally and regionally delivered Employment benefits and Support Measures and similar programs, pan-Canadian activities that are national or multi-regional in scope or purpose are delivered by HRSDC in any of the provinces and territories through its Employment benefits and Support Measures and similar programs. Pan-Canadian activities include programming similar to Employment benefits and Support Measures delivered by Aboriginal organizations under Aboriginal Human Resources Development Agreements.

Employment benefits and Support Measures

The five employment benefits are:

• Targeted Wage Subsidies to encourage employers to hire individuals who they would not normally hire in the absence of a subsidy.
• Self-Employment to help individuals to create jobs for themselves by starting a business.
• Job Creation Partnerships to provide individuals with opportunities through which they can gain work experience which leads to on-going employment.
• Skills Development to help individuals to obtain skills for employment, ranging from basic to advanced skills through direct assistance to individuals, and, where applicable, contributions to provinces/territories or provincially/territorially funded training institutions to cover costs not included in tuition fees.
• Targeted Earnings Supplements to encourage individuals to accept employment by offering them financial incentives.

It should be noted that of the employment benefits listed above, Targeted Earnings Supplements has not yet been implemented. Pilot research projects were conducted to evaluate the effectiveness of Targeted Earnings Supplements but HRSDC has not yet arrived at a feasible design.

Eligibility to receive assistance under the employment benefits extends to persons who are insured participants as defined in Section 58 of the Employment Insurance Act, i.e., active Employment Insurance claimants and former Employment Insurance claimants (individuals who have had Employment Insurance claims that ended in the past three years or those who have received maternity or parental benefits in the past five years after which they left the labour market to care for newborn or new adopted children).

Part II of the legislation also authorizes the establishment of support measures in support of the National Employment Service. The three measures are:

• Employment Assistance Services to assist organizations in the provision of employment services to unemployed persons.
• Labour Market Partnerships to encourage and support employers, employee and/or employer associations and communities to improve their capacity for dealign with human resource requirements and implementing labour force adjustments.
• Research and Innovation to support activities which identify better ways of helping persons prepare for or keep employment and be productive participants in the labour force.

Financial Data

For 2007 - 2008, the Employment Insurance Part II expenditure authority of $2.167 billion represents 0.5% of total estimated insurable earnings of $428.921 billion. This represents a lower level of expenditures than the 0.8% ceiling imposed under the Act, which is estimated at $3.431 billion in 2007 - 2008.

Some of the savings from Part I income benefits generated by the Employment Insurance reform are included in these funds to provide job opportunities and help Canadians get back to work more quickly. The amount of re investment reached maturity at $800 million in 2000 - 2001.

2007-2008 Employment Insurance Planet

(millions of dollars)	Base	Re-Investment	Total Plan
Newfoundland and Labrador	59.3	73.1	132.4
Nova Scotia	50.7	30.3	81.0
New Brunswick	50.5	42.1	92.6
Prince Edward Island	16.7	10.0	26.7
Quebec	348.8	248.1	596.9
Ontario	345.1	184.1	529.2
Manitoba	36.4	10.2	46.6
Saskatchewan	29.0	9.9	38.9
Alberta	71.5	35.9	107.4
Northwest Territories	1.8	1.6	3.4
Nunavut	1.8	1.0	2.8
British Columbia	136.6	151.7	288.3
Yukon	1.8	2.0	3.8
	1,150.0	800.0	1,950.0
Pan-Canadian Responsibilitiesa	193.1	0.0	193.1
Funds available for Employment Benefits and Support Measures	1,343.1	800.0	2,143.1
a Funds earmarked for Pan-Canadian priorities, such as Aboriginal programming, sectoral and innovations projects. The amount is net of $12.8 million funds permanently converted to operating costs and of resources identified in the Plan as part of Government Wide Reallocation exercise.

Expected Results

An accountability framework has been developed that respects the legal responsibility of the Minister of Human Resources and Skills Development for the Employment Insurance Account. Key indicators will measure both the short and long term outcomes of Employment benefits and Support Measures.

It is expected that 360,000 active and former claimants will be assisted in 2007 - 2008. These estimates may change, depending on labour market conditions and agreements achieved with provinces and territories.

Formative evaluations were completed during the initial implementation of Labour Market Development Agreements programming - between the years 1999 to 2002. They were focused on program design, delivery, implementation issues, client satisfaction and short-term success.

More detailed information on the formative evaluations is available at: http://www.hrdc-drhc.gc.ca/en/cp/sp/sdc/evaluatio/page00.shtml

Summative evaluations of Employment benefits and Support Measures are aimed at providing information on the impact of Employment benefits and Support Measures in helping participants prepare for, find and keep jobs. In addition to employment impacts, these evaluations examine a range of outcomes related to Employment benefits and Support Measures participation including skills gains, job quality and increased self-sufficiency in relation to government income support assistance.

Evaluation results to-date (both from formative and summative studies) underscore the importance of the local socio-economic context and client characteristics on programming and program outcomes. Variances in local socio-economic situations appear to affect Employment benefits and Support Measures implementation and effectiveness - suggesting the importance of tailoring programs to local needs to improve the outcomes of interventions.

EBSM (EI Part II Activities) ^a

	Clients Employed/Self-Employed	Unpaid benefits	Active Claimants Served
Targeted Results 2005 -2006ab	217,622	$837.9M	442,549
Actual Results 2005 - 2006	198,727	$807.5Mc	361,491d
Targeted Results 2006 - 2007	199,763	$765.1M	332,134
Expected Results 2007 - 2008	190,000e	$800.0M	360,000f
a Exclusive of Employment Information Services. This table includes Aboriginal pan-Canadian Employment benefits and Support Measures numbers which were not reported in this annex of the Employment Insurance Expenditure Plan (Part II) for 2005 - 2006. b The targeted results for Clients Employed and Unpaid benefits for 2004 - 2005 and 2005 - 2006 are the totals as submitted by the regions, provinces and territories. . "Clients served" includes Active EI claimants from all regions/provinces/ territories, plus Former EI claimants from Quebec. The Quebec agreement requires that the province report on Active and Former EI claimants, as "Clients served." c Represents one count of unpaid benefits per client, to avoid the double counting of unpaid benefits of clients who participated in both Regular and Aboriginal pan-Canadian Employment benefits and Support Measures. d The Regular Employment benefits and Support Measures clients served include Active Employment Insurance claimants from all regions, plus Former claimants from Quebec. The Quebec agreement requires that the province report on Active and Former Employment Insurance claimants, as "Clients served." It also includes 7,948 Aboriginal pan-Canadian Employment benefits and Support Measures clients served. e Includes Regular EBSM (182,500) and the Aboriginal pan-Canadian EBSM (7,500). f Includes Regular EBSM (341,500) and the Aboriginal pan-Canadian EBSM (18,500).

Consolidated Report on Canada Student Loans

In August 2000, the Canada Student Loans Program was shifted from the risk-shared financing arrangements that had been in place with financial institutions between 1995 and July 2000 to a direct student loan financing plan.²³ This meant that the Program had to redesign the delivery mechanism in order to directly finance student loans. In the new arrangement, the Government of Canada provides the necessary funding to students and two service providers have contracts to administer the loans. As of March 2008, the Government of Canada will shift from two service provider contracts to one single service provider.

Reporting Entity

The entity detailed in this report is the Canada Student Loans Program only and does not include departmental operations related to the delivery of the Canada Student Loans Program. Expenditures figures are primarily statutory in nature, made under the authority of the Canada Student Loans Act and the Canada Student Financial Assistance Act.

Basis of Accounting

The financial figures are prepared in accordance with generally accepted accounting principles and as refl ected in the Public Sector Accounting Handbook of the Canadian Institute of Chartered Accountants.

Specific Accounting Policies

Revenues

Two sources of revenue are reported: interest revenue on Direct Loans and recoveries on Guaranteed and Put Back Loans. Government accounting practices require that recoveries from both sources be credited to the government's Consolidated Revenue Fund. They do not appear along with the expenditures in the Canada Student Loans Program accounts, but are reported separately in the financial statements of Human Resources and Social Development Canada and the government.

Interest Revenue on Direct Loans

Borrowers are required to pay simple interest on their student loans once they leave full-time studies. At the time they leave school, students have the option of selecting a variable (prime + 2.5%) or fixed (prime + 5%) interest rate. The figures represent the interest accrued on the outstanding balance of the government-owned Direct Loans. Borrowers continue to pay the interest accruing on the guaranteed and risk-shared loans directly to the private lender holding these loans. Effective August 1, 2005, the weekly loan limit increased from $165 per week to $210 per week of study. As more funds are now available to students, total loan disbursements and interest revenue generated will continue to increase.

Recoveries on Guaranteed Loans

The government reimburses the private lenders for any loans issued prior to August 1, 1995 that go into default (i.e., lenders claim any amount of principal and interest not repaid in full). The figures represent the recovery of principal and interest on these defaulted loans.

Recoveries on Put-back Loans

Under the risk-shared agreements, the government will purchase from the participating financial institutions any loans issued between August 1, 1995 to July 31, 2000 that are in default of payments for at least 12 months after the period of study, that in aggregate, do not exceed 3% of the average monthly balance of the lender's outstanding student loans in repayments. The amount paid is set at 5% of the value of the loans in question. The figures represent the recovery of principal and interest on these loans.

Canada Study Grants and Canada Access Grants

Canada Study Grants and Canada Access Grants improve access to post-secondary education by providing non-repayable financial assistance to post-secondary students. Four types of Canada Study Grants are available to assist: (1) students with permanent disabilities in order to meet disability-related educational expenses (up to $8,000 annually); (2) students with dependants (up to $3,120 for full-time students and up to $1,920 for part-time students, annually); (3) high-need part-time students (up to $1,200 annually); and (4) women in certain fields of Ph.D. studies (up to $3,000 annually for up to three years). Two Canada Access Grants are available since August 1, 2005, to assist: (1) students from low-income families entering their first year of post-secondary studies (50% of tuition, up to $3,000); and (2) students with permanent disabilities in order to assist with education and living expenses (up to $2,000 annually).²⁴

Collection Costs

These amounts represent the cost of using private collection agencies to collect defaulted Canada Student Loans. The loans being collected include: risk-shared and guaranteed loans that have gone into default and for which the government has bought back from the private lender; and Direct Loans issued after July 31, 2000, that are returned to HRSDC by the third party service provider as having defaulted. As of August 1, 2005 the Canada Revenue Agency Non Tax Collections Directorate undertook the responsibility for the administration of the collection activities of the guaranteed, risk-shared and direct student loans.

Service Provider Costs

Canada Student Loans Program uses third party service providers to administer loan origination, in-study loan management, post-studies repayment activities and debt management. This item represents the cost associated with these contracted services.

Risk Premium

Risk premium represents part of the remuneration offered to lending institutions participating in the risk-shared program from August 1, 1995 to July 31, 2000. The risk premium represents 5% of the value of loans being consolidated which is calculated and paid at the time students leave studies and go into repayment. In return, the lenders assume the risk associated with non-repayment of these loans.

Put-Back

Subject to the provisions of the contracts with lending institutions, the government will purchase from a lender the student loans that are in default of payment for at least 12 months and that, in aggregate, do not exceed 3% of the average monthly balance of the lender's outstanding student loans in repayments. The amount paid is set at 5% of the value of the loans in question. The figures also include any refund made to participating financial institutions on the recoveries.

Administrative Fees to Provinces and Territories

Pursuant to the Canada Student Financial Assistance Act, the government has entered into arrangements with nine provinces and one territory to facilitate the administration of the Canada Student Loans Program. They administer the application and needs assessment activities associated with federal student financial assistance and in return they are paid an administrative fee. As of August 1, 2005 administrative fees paid to provinces were increased to improve the compensation for their part in the administration of the Canada Student Loans Program.

In-Study Interest Borrowing Expense

The capital needed to issue the Direct Loans is raised through the Department of Finance's general financing activities. The cost of borrowing this capital is recorded in the Department of Finance's overall financing operations. The figures represent the cost attributed to Canada Student Loans Program in support of Direct Loans while students are considered in study status. Weekly loan limits increased effective August 1, 2005. As more funds are now available to students, total loan disbursements have grown, and as a result the in-study interest borrowing expense will continue to rise.

In-Repayment Interest Borrowing Expense

The capital needed to issue the Direct Loans is raised through the Department of Finance's general financing activities. The cost of borrowing this capital is recorded in the Department of Finance's overall financing operations. The figures represent the cost attributed to Canada Student Loans Program in support of Direct Loans while students are in repayment of their Canada Student Loans.

In-Study Interest Subsidy

A central feature of federal student assistance is that student borrowers are not required to pay the interest on their student loans as long as they are in full-time study and, in the case of loans negotiated prior to August 1, 1993, for six months after the completion of studies. Under the guaranteed and risk-shared programs, the government pays the interest to the lending institutions on behalf of the student.

Interest Relief

Assistance may be provided to cover loan interest and suspend payments on the principal of loans in repayment for up to 54 months for borrowers experiencing temporary difficulties repaying their loans. The shift from Guaranteed and Risk-Shared Loans to Direct Loans did not alter interest relief for loans in distress from the borrower's perspective; however, the method of recording associated costs changed. For loans issued prior to August 1, 2000, Canada Student Loans Program compensates lending institutions for lost interest equal to the accrued interest amount on loans under Interest Relief. For loans issued after August 1, 2000, an interest relief expense is recorded to offset the accrued interest on direct loans. Effective August 1, 2005 income thresholds used to determine Interest Relief eligibility increased in order to make Interest Relief accessible to a greater number of borrowers.

Debt Reduction in Repayment

Debt Reduction in Repayment assists borrowers experiencing long-term difficulties repaying their loans. Debt Reduction in Repayment is a federal repayment assistance program through which the Government of Canada reduces a qualifying borrower's outstanding Canada Student Loans principal to an affordable amount after Interest Relief has been exhausted and only after 5 years have passed since the borrower ceased to be a student. As of August 1, 2005, the maximum amount of Debt Reduction in Repayment assistance is $26,000, which is available to eligible borrowers in an initial deduction of up to $10,000, a second deduction of up to $10,000 and a final deduction of up to $6,000. For loans issued prior to August 1, 2000, Canada Student Loans Program pays the lending institutions the amount of student debt principal reduced by the Government of Canada under Debt Reduction in Repayment. For loans issued after August 1, 2000, the Government of Canada forgives a portion of the loan principal.

Claims Paid and Loans Forgiven

From the beginning of the program in 1964 until July 31, 1995, the government fully guaranteed all loans issued to students by private lenders. The government reimburses private lenders for any of these loans that go into default (i.e., subject to specific criteria, lenders may claim any amount of principal and interest not repaid in full, after which the Canada Revenue Agency's Collection Services will attempt to recover these amounts).²⁵ The risk-shared arrangements also permitted loans issued from August 1, 1995 to July 31, 2000 to be guaranteed under specific circumstances. This item represents the costs associated with loan guarantees.

Pursuant to the Canada Student Loans Act and the Canada Student Financial Assistance Act, the government incurs the full amount of the unpaid principal plus accrued interest in the event of the death of the borrower or, if the borrower becomes permanently disabled and cannot repay the loan without undue hardship.

Bad Debt Expense

Under Direct Loans, the government owns the loans issued to students and must record them as assets. As a result, generally accepted accounting principles require a provision be made for potential future losses associated with these loans. The provision must be made in the year the loans are issued even though the losses may occur many years later. The figures represent the annual adjustment to the provisions for Bad Debt and Debt Reduction in Repayment on Direct Loans.

Alternative Payments to Non-participating Provinces and Territories

Provinces and territories may choose not to participate in the Canada Student Loans Program. These provinces and territories receive an alternative payment to assist in the cost of delivering a similar student financial assistance program.

Commitments

For the 2007 - 2008 fiscal year, the expected cash flow for Service Provider contracts is: $03.6 million. It is expected that the last option to extend the remainder of the contracts to March 31^st, 2008 will be exercised.

Consolidated Canada Student Loans Programs - Combined Programs

(millions of dollars)	Actual		Forecast	Planned Spending e
	2004-2005	2005-2006	2006-2007	2007-2008	2008-2009	2009-2010
Revenue
Interest Revenue on Direct Loans	226.6	315.7	370.4	445.3	497.9	549.4
Recoveries On Guaranteed Loans	76.2	66.8	62.5	53.1	45.1	38.3
Recoveries On Put-Back Loans	11.0	13.1	16.6	19.1	21.6	24.0
Total Revenue	313.8	395.6	449.5	517.5	564.6	611.7
Expenses
Transfer Payments
Canada Study Grants and Canada Access Grants	64.5	129.7	150.6	136.1	138.0	140.4
Loan Administration
Collection Costs a	14.8	13.6	18.5	21.0	23.3	23.3
Service Bureau Costs	46.0	50.2	66.1	83.3	77.2	89.9
Risk Premium	5.5	2.7	1.9	1.8	1.4	1.2
Put-Back	4.2	4.3	4.8	5.4	5.6	5.7
Administrative Fees to Provinces and Territories	9.4	13.9	14.2	14.2	14.2	14.3
Total Loan Administration Expenses	79.9	84.7	105.5	125.7	121.7	134.4
Cost of Government Support
Benefits Provided to Students
In-Study Interest Borrowing Expense (Class A) b	163.8	159.3	179.0	187.5	199.0	215.0
In Repayment Interest Borrowing Expense (Class B)b	96.6	111.4	150.1	174.6	200.2	227.9
In-Study Interest Subsidy (Class A)	16.1	12.1	11.9	9.2	6.1	3.9
Interest Relief	63.2	67.2	87.1	84.4	84.6	84.5
Debt Reduction in Repayment	27.1	31.4	24.3	24.5	12.8	7.0
Claims Paid and Loans Forgiven	27.7	24.8	27.5	24.7	23.9	23.2
Bad Debt Expense c
Debt Reduction in Repayment Expense	11.5	13.3	13.6	14.1	14.6	14.9
Bad Debt Expense	456.2	297.2	328.2	354.5	380.9	399.1
Total Cost of Government Support Expenses	862.2	716.7	821.7	873.5	922.1	975.5
Total Expenses	1,006.6	931.1	1,077.8	1,135.3	1,181.8	1,250.3
Net Operating Results	692.8	535.5	628.3	617.8	617.2	638.6
Alternative Payments to Non-Participating Province and Territories d	175.8	158.2	141.8	172.6	177.9	186.0
Final Operating Results	868.6	693.7	770.1	790.4	795.1	824.6
a These costs are related to Canada Student Direct Loans but are now reported by Canada Revenue Agency. b These costs are related to Canada Student Direct Loans but reported by the Department of Finance. c This represents the annual expense adjustment to the Provisions for Bad Debt and Debt Reduction in Repayment as required under Accrual Accounting.  The Bad Debt Expense figure for 2004-2005 includes an adjustment of $257.1 million following the revised Bad Debt Provision Rate published by the Office of the Chief Actuary in the Actuarial Report on the Canada Student Loans Program as at July 31, 2004.  This adjustment is retroactive to the beginning of the Direct Loans Regime (2000). d The figures represent the annual expense recorded under the Accrual Accounting as opposed to the actual amount disbursed to the Non-Participating Province and Territories.  The actual cash expense for Alternative Payments to Non-Participating Provinces and Territories for 2005-2006 was $ 161.3 M. e 2006-2007 and ongoing planned spending years include CSLP related amounts stemming from the Budget 2006 announcement.

 

Consolidated Canada Student Loans Programs - Direct Loans Only

(millions of dollars)	Supps B
	Actual		Forecast	Planned Spendinge
	2004-2005	2005-2006	2006-2007	2007-2008	2008-2009	2009-2010
Revenue
Interest Revenue on Direct Loans	226.6	315.7	370.4	445.3	497.9	549.4
Expenses
Transfer Payments
Canada Study Grants and Canada Access Grants	64.5	129.7	150.6	136.1	138.0	140.4
Loan Administration
Collection Costsa	7.0	6.9	11.3	13.7	16.2	16.2
Service Bureau Costs	46.0	50.2	66.1	83.3	77.2	89.9
Administrative Fees to Provinces and Territories	9.4	13.9	14.2	14.2	14.2	14.3
Total Loan Administration Expenses	62.4	71.0	91.6	111.2	107.6	120.4
Cost of Government Support
Benefits Provided to Students
In-Study Interest Borrowing Expense (Class A)b	163.8	159.3	179.0	187.5	199.0	215.0
In Repayment Interest Borrowing Expense (Class B)b	96.6	111.4	150.1	174.6	200.2	227.9
Interest Relief	28.4	43.9	68.0	73.6	78.4	80.8
Loans Forgiven	2.0	9.1	9.3	15.3	17.0	18.6
Bad Debt Expense c
Debt Reduction in Repayment Expense	1.5	13.3	13.6	14.1	14.6	14.9
Bad Debt Expense	456.2	297.2	328.2	354.5	380.9	399.1
Total Cost of Government Support Expenses	758.5	634.2	748.2	819.6	890.1	956.3
Total Expenses	885.4	834.9	990.4	1,066.9	1,135.7	1,217.1
Net Operating Results	658.8	519.2	620.0	621.6	637.8	667.7
Alternative Payments to Non-Participating Province and Territories d	175.8	158.2	141.8	172.6	177.9	186.0
Final Operating Results	834.6	677.4	761.8	794.2	815.7	853.7
a These costs are related to Canada Student Direct Loans but are now reported by Canada Revenue Agency. b These costs are related to Canada Student Direct Loans but reported by the Department of Finance. c This represents the annual expense adjustment to the Provisions for Bad Debt and Debt Reduction in Repayment as required under Accrual Accounting.  The Bad Debt Expense figure for 2004-2005 includes an adjustment of $257.1 million following the revised Bad Debt Provision Rate published by the Office of the Chief Actuary in the Actuarial Report on the Canada Student Loans Program as at July 31, 2004.  This adjustment is retroactive to the beginning of the Direct Loans Regime (2000). d The figures represent the annual expense recorded under the Accrual Accounting as opposed to the actual amount disbursed to the Non-Participating Province and Territories.  The actual cash expense for Alternative Payments to Non-Participating Provinces and Territories for 2005-2006 was $ 161.3 M. e 2006-2007 and ongoing planned spending years include CSLP related amounts stemming from the Budget 2006 announcement.

 

Consolidated Canada Student Loans Programs - Risk-Shared and Guaranteed Loans Only

(millions of dollars)	Actual		Forecast	Planned Spendinge
	2004-2005	2005-2006	2006-2007	2007-2008	2008-2009	2009-2010
Revenue
Recoveries On Guaranteed Loans	76.2	66.8	62.5	53.1	45.1	38.3
Recoveries On Put-Back Loans	11.0	13.1	16.6	19.1	21.6	24.0
Total Revenue	87.2	79.9	79.1	72.2	66.7	62.3
Expenses
Loan Administration
Collection Costs a	7.8	6.7	7.2	7.3	7.1	7.1
Risk Premium	5.5	2.7	1.9	1.8	1.4	1.2
Put-Back	4.2	4.3	4.8	5.4	5.6	5.7
Total Loan Administration Expenses	17.5	13.7	13.9	14.5	14.1	14.0
Cost of Government Support
Benefits Provided to Students
In-Study Interest Subsidy (Class A)	16.1	12.1	11.9	9.2	6.1	3.9
Interest Relief	34.8	23.3	19.1	10.8	6.2	3.7
Debt Reduction in Repayment	27.1	31.4	24.3	24.5	12.8	7.0
Claims Paid and Loans Forgiven	25.7	15.7	18.2	9.4	6.9	4.6
Total Cost of Government Support Expenses	103.7	82.5	73.5	53.9	32.0	19.2
Total Expenses	121.2	96.2	87.4	68.4	46.1	33.2
Net Operating Results	34.0	16.3	8.3	(3.8)	(20.6)	(29.1)
a These costs are related to Canada Student Direct Loans but are now reported by Canada Revenue Agency. b 2006-2007 and ongoing planned spending years include CSLP related amounts stemming from the Budget 2006 announcement.

 

• Previous Page
• Table of Contents
• Next Page