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Ottawa, October 5, 2001
2001-084 

2001-2002 New Canada Savings Bonds Campaign Launched

Related Document:

• Backgrounder.

Secretary of State (International Financial Institutions) Jim Peterson today announced details for the New Canada Savings Bonds campaign, including terms and conditions for Canada Premium Bonds (CPBs) and Canada Savings Bonds (CSBs), which go on sale October 9, 2001.

The Secretary of State highlighted key plans and activities for this year’s campaign, including the introduction of more online services for Canadians, a six-month sales period as a permanent feature of the annual campaign, and a continued focus on youth.

"The introduction of online sales keeps CSBs and CPBs in step with other similar financial products in the marketplace," said Secretary of State Peterson. "Canadians now have greater access to Government of Canada securities when and where it is most convenient for them."

CPBs offer a higher rate of interest at the time of issue than the CSB that is on sale at the same time. CPBs can be redeemed once a year on the anniversary of the issue date and during the 30 days thereafter. Once an issue date has passed, the announced interest rates for the posted period will not be changed. CSBs continue to offer minimum guaranteed annual interest rates, and these rates will be increased if market conditions warrant. CSBs are cashable at any time.

To complement the online sales initiative, Jacqueline Orange, President and Chief Executive Officer of Canada Investment and Savings, launched an online storytelling initiative called Tell Us Your CSB Story in association with Bell Globemedia. "Canada Savings Bonds have a long and proud history in our country. This gives Canadians of all ages the opportunity to share their personal stories of how CSBs have helped shape their lives in some meaningful way," Ms. Orange said.

Canadians are encouraged to submit their stories online via www.sympatico.ca or a link from www.csb.gc.ca. The Tell Us Your CSB Story promotion runs until November 30, 2001.

Canada Investment and Savings will also enhance its online savings initiative for young Canadians by refreshing its youth Web site and launching a new promotion as part of its Great Canadians Save activities. The Web site, www.kidscansave.gc.ca, provides young people and their parents with fun and interesting resources that help promote the value of saving.

A youth contest in association with YTV Canada Inc. and Groupe TVA inc. features an interactive game reinforcing the three golden rules of saving: pay yourself too, start saving early and stick with a plan. Canadians 18 years old and under can enter the contest online via YTV at www.ytv.com, TVA at www.tva.canoe.ca, or via a link from www.kidscansave.gc.ca until November 4, 2001.

Interest rates for CPB Series 21 (November 1, 2001) and CSB Series 72 (November 1, 2001), together with rates for outstanding CPB Series 3 (November 1, 1998), CSB Series 45 (November 1, 1990), CSB Series 46 (November 1, 1991), CSB Series 47 (November 1, 1992), CSB Series 48 (November 1, 1993), CSB Series 49 (November 1, 1994), CSB Series 50 (November 1, 1995), CSB Series 54 (November 1, 1998), CSB Series 60 (November 1, 1999) and CSB Series 66 (November 1, 2000), were also announced today. Please refer to the accompanying interest rate news release.

A backgrounder highlighting the terms and conditions of New Canada Savings Bonds is attached.

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For further information:

If you would like to receive automatic e-mail notification of all news releases, please visit the Department of Finance Canada Web site at http://discussion.fin.gc.ca/finealert/alert_e.asp.

Backgrounder

New Canada Savings Bonds

The 2001-2002 Series (Canada Premium Bonds Series 21 to 26 and Canada Savings Bonds Series 72 to 77)

Canada Premium Bonds (CPBs) and Canada Savings Bonds (CSBs) are each offered in two forms: regular interest bonds (R-bonds), which pay interest annually until the earlier of maturity and redemption; and compound interest bonds (C-bonds), on which interest is reinvested annually until the earlier of maturity and redemption. The rate at which compound interest is earned will be equal to the annual interest rate payable for that year. The term to maturity for both types of CPBs and CSBs is 10 years.

Principal and interest for both CPBs and CSBs are fully backed by the Government of Canada.

The R-bonds offer the convenient option of direct deposit of interest. Bondholders wishing to have annual interest deposited directly into their chequing or savings account may make the necessary arrangements where they normally bank. Bondholders may also indicate this option on the application form at the time of purchase.

CPBs offer a higher rate of interest at the time of issue than the CSB on sale at the same time, and are redeemable once a year on the anniversary date of issue and during the 30 days thereafter. Once an issue date has passed, the announced interest rates for the posted period will not be changed.

CSBs provide minimum guaranteed annual interest rates. The minimum guaranteed annual interest rates will be increased if market conditions warrant, but bondholders will not earn less than the rates announced for that series for the posted period. CSBs are cashable at any time.

Canadians will be able to purchase CPBs and CSBs directly from the Government online at www.csb.gc.ca, and by telephone between 8 a.m. and 8 p.m. Eastern Time, Monday to Friday, by calling toll-free at 1 888 773-9999.

Customers may also purchase CPBs and CSBs at banks and other authorized sales outlets including investment dealers, stockbrokers, trust and loan companies, credit unions, caisses populaires and their sub-agents. In addition, thousands of firms and organizations across the country currently sponsor the New Canada Savings Bonds Payroll Program to help their employees invest and save by purchasing compound interest CSB Series 72 through regular payroll deductions. CPBs are not currently available for purchase through payroll deductions.

Introduced in 1995, The Canada RSP provides Canadians with the opportunity to purchase CPBs and CSBs directly as registered retirement savings plan (RRSP) investments, with no need for a self-directed plan. Only C-bonds may be held in The Canada RSP.

There are no administrative fees or service charges associated with The Canada RSP or investments held in this plan. The minimum bond purchase in The Canada RSP is $500 per series.

Rather than bond certificates, RSP statements of account showing your holdings are issued twice a year as at June 30 and December 31.

Purchases of bonds in The Canada RSP can be made online at www.csb.gc.ca, by telephone at 1 888 773-9999, or wherever you bank or invest.

The registered retirement income fund (RRIF) option was introduced in 1997 and gives Canadians the option of transferring funds (except locked-in funds) held in their RRSP or RRIF to a no-fee RRIF – The Canada RIF – that holds CSBs and CPBs as investments. The Canada RIF is designed to provide a steady retirement income while continuing the deferral of tax on the retirement savings remaining in the fund.

There are no administrative fees or service charges associated with The Canada RIF or investments held in this fund. The minimum bond purchase in The Canada RIF is $500 per series.

Holders of The Canada RIF can choose to receive payments every month, every two, three, four or six months, or yearly with the withdrawal amounts completely flexible – provided the annual minimum legislated amounts are met. These payments are made on the first business day of every selected period. CPBs can be redeemed at any time to facilitate regular periodic payments from The Canada RIF. In addition, lump-sum payments can be requested on the anniversary of the issue date and during the 30 days thereafter for CPBs. For CSBs, lump-sum payments can be requested at any time. Only C-bonds may be held in The Canada RIF.

Rather than bond certificates, RIF statements of account showing your holdings are issued as at the end of each calendar quarter.

Purchases of bonds in The Canada RIF can be made wherever you bank or invest.

Investors may cash CPBs on the anniversary of the issue date and during the 30 days thereafter by contacting any authorized sales agent’s office in Canada and presenting the bond certificate and proper identification. If the CPBs are redeemed during the 30 days following the anniversary of the issue date, no interest will be earned for the period following the anniversary date.

Investors may cash CSBs at any time by contacting any authorized sales agent’s office in Canada and presenting the bond certificate and proper identification.

No interest will be paid on bonds if cashed prior to three months following the date of issue, unless the redemption is required to facilitate regular periodic payments from The Canada RIF. Interest earned from the issue date will be paid on bonds redeemed after this three-month period (e.g. after January 31, 2002, in the case of the November 1, 2001, bond issues). Interest will accrue monthly, which means no interest is earned in respect of the calendar month in which bonds are redeemed. Interest accrues daily for CSBs purchased under the new Payroll Savings Program.

CPBs may be redeemed at other times by contacting the Bank of Canada, if evidence acceptable to the Bank of Canada is provided to show that the owner has died; that the redemption is ordered by a court; or that the proceeds of redemption are required by the owner to avoid bankruptcy, purchase a home further to the Home Buyers’ Plan of the Government of Canada, or pursue education further to the Lifelong Learning Plan of the Government of Canada.

For CSBs purchased under the new Payroll Savings Program, redemption is done through the Bank of Canada. Bondholders may call toll-free at 1 877 899-3599.

Holders may redeem bonds in The Canada RSP and The Canada RIF subject to the terms and conditions of the bonds by contacting the Trustee, CIBC Mellon Trust Company, in writing. CPBs are redeemable at any time to facilitate regular periodic payments from The Canada RIF. The minimum regular periodic payment amount is $25 per payment. The minimum lump-sum withdrawal amount for each series of bonds is the lesser of $100 and the balance in bonds. As with other RRSP and RRIF investments, redemptions are subject to withholding tax.

For R-bonds, annual interest payments are prepared and issued during the 11^th and 12^th months following the issue date and anniversary dates. If R-bonds are redeemed during these months, an amount equal to any unearned interest for those months will be deducted from the proceeds of redemption as that amount will be included in the owner’s annual interest payment. This procedure facilitates the preparation of annual interest payments.

Both CPBs and CSBs are registered as to principal and interest. For cash purchases, both bonds will be certificated and offered in denominations of $300, $500, $1,000, $5,000 and $10,000. A $100 bond will be available in compound interest form only.

Bonds purchased in The Canada RSP, The Canada RIF or under the new Payroll Savings Program are non-certificated and carry no denominations.

The maximum amount of principal that a person may own per series and per type of registration of CPBs and CSBs is $200,000, respectively. A person may own CPBs and CSBs above this limit if they are purchased with the proceeds of a maturing series, or because the person received them upon the death of the owner or a co-owner.

At any time before they mature, C-bonds may be exchanged for the same denomination in R-bonds of the same series plus, if applicable, payment of earned interest. CSBs purchased under the new Payroll Savings Program may not, however, be exchanged for other bonds.

Prior to 10 months following their issue date, R-bonds may be exchanged for the same denomination in C-bonds of the same series. At any time before they mature, bonds may be exchanged for an equal amount in other denominations of the same series and type.

If lost or stolen, bonds will be replaced upon provision of acceptable documentation to the Bank of Canada.

Bonds may only be registered in the name of residents of Canada as follows: one or more individuals; estates of deceased persons; sole proprietorships; personal trusts; a trustee appointed under a will; and trusts governed by RRSPs, registered pension plans, deferred profit-sharing plans, employee profit-sharing plans, RRIFs and registered education savings plans. Bonds may also be registered in the name of a charitable organization that has a Canada Customs and Revenue Agency business number.

The registration options with purchases under the new Payroll Savings Program are more limited; bondholders should refer to the terms and conditions associated with payroll purchase application forms.

There are plans for six consecutive series of both the CPB and the CSB during this campaign, one new series of each bond for six consecutive months:

For transfers of RRSP and RRIF funds into The Canada RSP and The Canada RIF, the issue date will be determined by the date on the application form and receipt of funds and documentation by the Trustee.

CPB Series 21 and CSB Series 72 with an issue date of November 1, 2001, will be available for purchase from Tuesday, October 9, 2001, up to and including Thursday, November 1, 2001. Those purchasing bonds between October 9 and November 1 will be able to date their payments November 1, the day CPB Series 21 and CSB Series 72 bonds start earning interest.

Rates were announced today for the November 1 issue of CPB Series 21 and CSB Series 72, together with rates for outstanding CPB Series 3 (November 1, 1998), CSB Series 45 (November 1, 1990), CSB Series 46 (November 1, 1991), CSB Series 47 (November 1, 1992), CSB Series 48 (November 1, 1993), CSB Series 49 (November 1, 1994), CSB Series 50 (November 1, 1995), CSB Series 54 (November 1, 1998), CSB Series 60 (November 1, 1999) and CSB Series 66 (November 1, 2000). Please refer to the accompanying interest rate news release. Additional information on the rates of New Canada Savings Bonds is also available on our Web site and at financial institutions across Canada.

Interest rates for subsequent series of CPBs and CSBs with issue dates from December 1, 2001, to April 1, 2002, will be announced at the beginning of the respective sales period for each issue.

As in the past, the Minister of Finance reserves the right to terminate sales at any time.

CSB Series 44 issued in 1989 matures on November 1 of this year, and following that will no longer earn interest. To facilitate reinvestment in CPB Series 21 and CSB Series 72, bondholders may present their maturing bonds where they bank or invest on or before November 1, 2001.

Thousands of firms and organizations across the country offer the New Canada Savings Bonds Payroll Program to help their employees invest and save by purchasing CSBs through payroll deductions. The CPB is not available for purchase through the Payroll Savings Program at this time.

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For further information:

Tel: 1 800 575-5151 (toll-free)
TTY: 1 800 354-2222 (toll-free)
Fax: (613) 782-7716
E-mail address: csb@csb.gc.ca
Web site: www.csb.gc.ca