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Ottawa, October 1, 2002
2002-079

2002-2003 New Canada Savings Bonds Campaign Launched

Related document:

• Backgrounder.

John Manley, Deputy Prime Minister and Minister of Finance, announced details of the New Canada Savings Bonds campaign, including terms and conditions for Canada Premium Bonds (CPBs) and Canada Savings Bonds (CSBs), which go on sale today, October 1, 2002.

Minister Manley highlighted key plans and activities for this year’s sales campaign, including greater access to New Canada Savings Bonds and the Payroll Savings Program and continued programming including a national storytelling initiative and a focus on youth.

“Canadians will benefit from this year’s plans to improve access to Canada Premium Bonds and Canada Savings Bonds,” said Minister Manley. “Innovation in the way we offer and sell New Canada Savings Bonds and greater online access ensure that we are keeping up with the ways in which Canadians are choosing to purchase their financial products.”

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.

Again this year Canadians of all ages are encouraged to share their savings bond stories online at www.csbstories.ca or via a link from www.csb.gc.ca. The Tell Us Your CSB Story contest, held in association with Maclean’s and L’actualité magazines, welcomes stories until November 30, 2002, about how CSBs have helped Canadians achieve their personal goals. Thirteen individuals from across Canada could win a $1,000 Canada Savings Bond.

“Canada Savings Bonds have a long and proud tradition in our country. In fact, many Canadians were first introduced to the concept of saving through the gift of a bond,” said Jacqueline Orange, President and Chief Executive Officer of Canada Investment and Savings. “Since beginning the storytelling initiative, we have received hundreds of heartwarming entries from Canadians right across the country who shared their personal stories about how bonds helped put them on solid ground.”

Canada Investment and Savings will also enhance its youth savings initiative, which is designed to promote the value of saving. A youth contest held in association with media partners 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 16 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 3, 2002.

The Minister also announced today that the Department of Finance, together with Canada Investment and Savings, the special operating agency responsible for the Retail Debt Program, has implemented a new Internet-based delivery service to provide notification of future interest rates for subsequent bond series.

The Department will no longer issue news releases to announce interest rates following the start of the traditional fall campaign. Instead, effective immediately, persons interested in receiving information about Canada Premium Bond and Canada Savings Bond interest rates may subscribe to an automatic e-mail notification service at www.csb.gc.ca. Those who already subscribe to the New Canada Savings Bonds e-newsletter service are not required to re-register to receive these automatic notifications.

Interest rates for CPB Series 27 (November 1, 2002) and CSB Series 78 (November 1, 2002), together with rates for outstanding CPB Series 9 (November 1, 1999), 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), CSB Series 66 (November 1, 2000) and CSB Series 72 (November 1, 2001) were also announced today. Please refer to the accompanying interest rate news release.

Canadians can purchase CPBs and CSBs directly from the Government online at www.csb.gc.ca, by phone between 8 a.m. and 8 p.m. Eastern Time, Monday to Friday, by calling toll-free at 1 888 773-9999, or wherever they bank or invest.

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://www.fin.gc.ca/scripts/register_e.asp.

Backgrounder

New Canada Savings Bonds

The 2002-2003 Series (Canada Premium Bonds Series 27 to 32 and Canada Savings Bonds Series 78 to 83)

Regular and Compound Interest

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 annually will be equal to the 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.

R-bonds offer the convenient option of direct deposit of annual 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 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 provide minimum guaranteed annual interest rates. These 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 can purchase CPBs and CSBs directly from the Government online at www.csb.gc.ca, and by phone 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 78 through regular payroll deductions. CPBs are not currently available for purchase through payroll deductions.

RRSP Option

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 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 Canadians bank or invest.

RRIF Option

The registered retirement income fund (RRIF) option 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 CPBs and CSBs as investments. The Canada RIF is designed to provide 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 at any time for CSBs. For CPBs, lump-sum payments can be requested on the anniversary of the issue date and during the 30 days thereafter.

Only C-bonds may be held in The Canada RIF. Rather than bond certificates, RIF statements of account showing holdings are issued as at the end of each calendar quarter.

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

Redeeming Bonds

Customers 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 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.

Customers 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, 2003, in the case of the November 1, 2002, 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 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 Payroll Savings Program, redemption is done by telephone between 8:00 a.m. and 8:00 p.m. Eastern Time, Monday to Friday, by calling 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 may be 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.

Denominations

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 Payroll Savings Program are non-certificated and carry no denominations.

Ownership Limit

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.

Exchanging Bonds

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 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.

Registration

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

Issues and When Available

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.

Sales Period

CPB Series 27 and CSB Series 78 with an issue date of November 1, 2002, will be available for purchase from Tuesday, October 1, 2002, up to and including Friday, November 1, 2002. Those purchasing bonds during the October 1 to November 1 period will be able to date their payments November 1, 2002, the day CPB Series 27 and CSB Series 78 bonds start earning interest.

Rates were announced today for the November 1 issue of CPB Series 27 and CSB Series 78, together with rates for outstanding CPB Series 9 (November 1, 1999), 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), CSB Series 66 (November 1, 2000) and CSB Series 72 (November 1, 2001). 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 at www.csb.gc.ca and at financial institutions across Canada.

Interest rates for subsequent series of CPBs and CSBs with issue dates from December 1, 2002, to April 1, 2003, 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.

Outstanding Canada Savings Bonds Series 45

CSB Series 45 issued in 1990 matures on November 1 of this year, and following that date will no longer earn interest. To facilitate reinvestment in CPB Series 27 and CSB Series 78, bondholders may present their maturing bonds where they bank or invest on or before November 1, 2002.

New Canada Savings Bonds Payroll Program

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.