WorkSafeNB administers a long-term balanced system, and is accountable to both injured workers and employers. WorkSafeNB collects assessments from employers to cover all future costs for injured worker benefits for both accidents and exposures that occur in the accident year. Employer assessments are based on a number of assumptions. When actual experience does not align with these assumptions, a surcharge or credit for prior year deviations may be included in future employer assessments. This approach is intended to provide orderly funding of WorkSafeNB’s obligations and to enhance security of long-term benefits for injured workers.
The Board of Directors’ long-term fiscal strategy has three fundamental principles:
- Recognition of all liabilities;
- Full funding of claim costs; and
- Workers’ compensation system sustainability.
- WorkSafeNB recognizes all liabilities at each financial year-end to estimate all anticipated costs arising from claims or exposures up to the valuation date, including anticipated future administration costs and occupational diseases incurred but not yet reported. These liabilities are determined by an actuarial evaluation, in accordance with accepted actuarial practice for Workers Compensation Boards in Canada. WorkSafeNB’s annual financial performance is as measured from the last audited financial statements in conformity with generally accepted accounting standards in Canada.
- WorkSafeNB also recognizes any unusual changes altering the benefits valued in the latest financial report and having a material financial impact on the liabilities.
- WorkSafeNB maintains the Accident Fund for payment of compensation, outlays and expenses under Part I of the Workers’ Compensation Act and the administrative costs under the Act and Workplace, Health and Safety Compensation Commission & Workers’ Compensation Appeals Tribunal Act and the Occupational Health and Safety Act.
- Annually, WorkSafeNB estimates assessments levied upon and collected from the employers to cover elements outlined in Policy 23-600 Setting Basic Assessment Rates. WorkSafeNB only collects a portion of the amounts they expect to pay injured worker from employer assessments and assumes that long-term investment returns will cover the remaining portion.
- Asset liability studies will be performed regularly, and in any event not less than every five years, to ensure asset mix of the investments and long term financial strategies are aligned with goals and best practice.
- The Board of Directors recognises that financial results will vary every year given the variability of short-term financial returns, claims experience and other factors. However, the Board approaches its decision-making with the long term objective of reaching a funding level between 115% and 125%.
- When the funding level falls below 115%, a surcharge is included in the assessments levied upon employers to return to 115% funding level. The surcharge is the difference between cumulative financial results and the 115% funding level, amortized over a period not greater than 10 years.
- When the funding level exceeds 125%, a credit shall be issued to employers. The credit is the difference between cumulative financial results and the 125% funding level, amortized over a period not greater than 10 years.
- WorkSafeNB may shorten the amortization period to address changes in liabilities. WorkSafeNB may increase the amortization period up to 15 years to address changes in the valuation of assets.
- In an effort to maintain rate stability, the credit will not exceed $0.35. The surcharge will be the greater of $0.35 or the surcharge needed to meet the minimum legislative requirement of reaching 100% funding target, over a period not greater than 15 years.
- If the funding level falls below 85%, a clear plan outlining the return to 100% funding level must be developed and communicated to stakeholders. If the funding level exceeds 145%, WorkSafeNB may consider reviewing the asset mix to lower the overall risk of the portfolio or consider other alternatives for the amount in excess of 145%.