Rebates are a method for distributing to employers a portion of the Compensation Fund’s reserves that have accrued to a surplus level over several years.
We distributed the first rebate to employers in 2015, followed by further rebates in 2016, 2017, 2018 and 2020.
The Compensation FundMaintaining the “Compensation Fund” (“the Fund”) is a requirement of the Workers’ Safety and Compensation Act. The Fund contains enough money to cover the total current and future costs of caring for workers injured on the job.
We aim to maintain the Fund in a target range of between 121 and 129 percent of our total liabilities. This ensures reserves are available to:
- keep employers’ assessment rates stable;
- protect employers and the Fund from the financial effects of catastrophic workplace events;
- provide a buffer against fluctuations in global financial markets; and
- provide benefits to workers both now and well into the future.
When the Fund’s level exceeds 129 percent, our funding policy considers it to be in a surplus position.
We use rate subsidies and, when necessary, rebates to return the Fund from a surplus back to the target range. Rebates are a responsible, controlled method for accelerating the distribution of surplus reserves to employers.
A surplus in the Compensation Fund is a result of sound and prudent financial management and due to improvements in health and safety and return-to-work outcomes in the workplace.
When we subsidize assessment rates, employers pay less than the actual cost of the compensation system. The cost of caring for injured workers does not go down when assessment rates are subsidized.
Rebates and assessment rates
As the Fund moves into the target range, we reduce assessment rates subsidies. This means that assessment rates increase and come closer towards the actual cost of the system.
In total, employers received approximately $63 million through rebates and rate subsidies to the end of 2019. In addition, further subsidies to the 2020 and 2021 assessment rates have not yet been accounted for in our funded position.