For many years employer organizations, the WCB/WSIB and the Ministry of Labour claimed the Board was in financial crisis, with the myth that an “unfunded liability” presents a danger to the viability of the workers’ compensation system, and that improvements to benefits could not be considered until it is eliminated. The Board eliminated the unfunded liability and reached a “surplus” situation by 2019 , eight years earlier than its original target. How has this been achieved when employers continue to pay lower assessment rates than they did 20 years ago?
- In November 2021 the Ontario government passed legislation (Bill 27) that allows the WSIB to redistribute “surplus” funds to employers. Submissions by ONIWG, IWC and other advocates protested that all cuts which reduced benefits to injured workers while eliminating the unfunded liability must first be restored in full!
What is an “unfunded liability”?
An unfunded liability is the difference between projected future costs of all the benefits of all injured workers on the books today for as long as they live and money in the bank now. The WSIB does not need to have all future payments in the bank today. As a mandatory program for employers it will always have a funding base for its future costs. As employers told Meredith, rather than a fully funded system they wanted a plan which allowed them to pay-as-you-go. That was cheaper for them than paying all the long-term costs at once.
Employers’ rates kept artificially low
The government announcement of elimination of the unfunded liability followed cuts to the average premium rate paid by employers of almost 30%, starting January 1, 2019; a reduction in 2017 of the average assessment rate by 6.2%, and a further 3.3% cut in 2018. Employers have enjoyed generous cuts in their rates since 1996 when the average premium was $3.00 per $100 of payroll. In 2009 the WSIB produced a chart for the Chair’s consultation which shows that if employers’ assessment rates had simply been kept at that 1996 level, by the year 2006 there would have been no unfunded liability.
With its 2021 premium rate hold the WSIB acknowledging the difficulties faced by employers in COVID-19 times; injured workers asked for similar relief. In October 2021 the WSIB announced a further reduction of 5.1% in the average premium rate in 2022.
Both the Auditor General and Harry Arthurs, chair of the Board’s 2010-2011 Funding Review, recognized that rate increases are key in covering the costs of the Board. Despite Professor Arthurs emphasis that claims (entitlements) and benefits should not be reduced to achieve the WSIB’s financial target, full funding has been paid for “on the backs of injured workers” through claims denials and benefit cuts.
- Injured Workers Community Legal Clinic. 2021, Nov. 17. Submission regarding Bill 27
- Injured Workers Community Legal Clinic. 2021, Aug. 10. Submission re WSIB Insurance Fund Surplus Distribution Model Consultation.
- Ontario Network of Injured Workers Groups. 2021, Aug. 8. Submission on WSIB Insurance Fund Surplus Distribution Model Consultation.
- Ontario Network of Injured Workers Groups. 2018, Sep. 28. Press Release: Injured Workers Call for Reversal of WSIB’s 30% Premium Rate Reduction for Employers.
- Singleton, Antony. 2018 Sep. 27. “The Reward for Paying Down the WSIB’s Unfunded Liability? Permanent Austerity, If You’re an Injured Worker.” Just Compensation (blog)
- Page, Peter. 2016 Jan.4. Open Letter to the Minister of Labour
- Di Santo. Odoardo. 2014, Jun. 27. “Ontario’s Workers’ Compensation System is Under Attack.” Toronto Star
- Ontario Legal Clinics’ Workers’ Compensation Network. 2012, Jan. 31. Submission on the KPMG Value for Money Audit. Toronto: OLCWCN
- Wilken, David K. 1998. “Manufacturing Crisis in Workers’ Compensation.” Journal of Law and Social Policy 13: 124-165.