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Ottawa, October 4, 2004
2004-060

2004–2005 Canada Savings Bonds Campaign Launched

Related document:

• Backgrounder.

The Department of Finance today announced details of the 2004–2005 Canada Savings Bonds sales campaign. The Department highlighted key plans and activities for this year’s campaign, including terms and conditions for the Canada Savings Bond (CSB) and the Canada Premium Bond (CPB).

The CSB continues to offer minimum guaranteed annual interest rates, and these rates may be increased if market conditions warrant. The CSB is cashable at any time and fully backed by the Government of Canada.

The CPB offers a higher rate of interest at the time of issue than the CSB that is on sale at the same time. The CPB 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.

The Department also announced the continuation of a 10-year maturity extension that will allow bondholders of CSB Series 47 to hold their bonds until November 1, 2014, if they choose. The bonds will continue to earn interest at competitive rates.

The 2004–2005 campaign marks the fourth year of the Canada Savings Bonds stories initiative, whereby Canadians are invited to submit their own personal stories about savings bonds. Canadians will be able to share their stories online until December 12, 2004, through the Tell Us Your CSB Story contest, presented by Maclean’s and L’actualité magazines at www.mycsbstory.ca.

Interest rates for CSB Series 90 (November 1, 2004) and CPB Series 40 (November 1, 2004), together with rates for outstanding 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 52 (November 1, 1997), CSB Series 54 (November 1, 1998), CSB Series 60 (November 1, 1999), CSB Series 66 (November 1, 2000), CSB Series 72 (November 1, 2001), CSB Series 78 (November 1, 2002), CSB Series 84 (November 1, 2003), CPB Series 3 (November 1, 1998) and CPB Series 21 (November 1, 2001) were also announced today. Please refer to the accompanying interest rate news release.

Persons interested in receiving interest rate information about subsequent series of the CSB and the CPB may subscribe to an automatic e-mail notification service at www.csb.gc.ca. Those who already subscribe to the e-newsletter service are not required to re-register to receive these automatic notifications.

Canadians can purchase the CSB and the CPB directly 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 sale for the CSB and the CPB is attached.

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

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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

The 2004–2005 Series (Canada Savings Bond Series 90 to 95 and Canada Premium Bond Series 40 to 45)

Effective October 4, 2004, there will be two types of bonds available for sale: the Canada Savings Bond (CSB) and the Canada Premium Bond (CPB). Principal and interest for the CSB and the CPB are fully backed by the Government of Canada. The Canada Investment Bond (CIB), piloted through investment dealers in 2003–2004, has been discontinued this year.

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

The CPB offers a higher rate of interest at the time of issue than the CSB on sale at the same time, and is 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.

The CSB and the CPB are each offered in two forms: regular interest bonds (R-bonds) and compound interest bonds (C-bonds).

R-bonds earn simple interest and pay interest annually until the earlier of maturity or redemption. Certificated 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 by selecting this option on the application form at the time of purchase.

C-bonds earn both simple interest and compound interest. Compound interest is earned based on the interest earned on each annual anniversary of the issue date prior to maturity. Simple and compound interest is paid at the time of redemption.

Canadians can purchase the CSB and the CPB directly from the Government online at www.csb.gc.ca, or by phone between 8 a.m. and 8 p.m. Eastern Time, Monday to Friday, by calling toll-free 1 888 773-9999. Customers may also purchase the CSB and the CPB 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, about 12,000 firms and organizations across the country participate in the Payroll Savings Program, enabling their employees to purchase compound interest CSBs through regular payroll deduction.

Issues and When Available

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

For transfers of registered retirement savings plan and registered retirement income fund 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. Compound interest CSBs and CPBs are the only investments permitted to be held in The Canada RSP and The Canada RIF.

The term to maturity for the November 1 issues of the CSB and the CPB is 10 years.

Sales Period

CSB Series 90 and CPB Series 40, with an issue date of November 1, 2004, will be available for purchase from Monday, October 4, 2004, up to and including Monday, November 1, 2004. Those purchasing bonds during the October 4 to November 1 period will be able to date their payments November 1, 2004, the day these bond series start earning interest.

Rates were announced today for the November 1 issue of CSB Series 90 (November 1, 2004) and CPB Series 40 (November 1, 2004), together with rates for outstanding 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 52 (November 1, 1997), CSB Series 54 (November 1, 1998), CSB Series 60 (November 1, 1999), CSB Series 66 (November 1, 2000), CSB Series 72 (November 1, 2001), CSB Series 78 (November 1, 2002), CSB Series 84 (November 1, 2003), CPB Series 3 (November 1, 1998) and CPB Series 21 (November 1, 2001). Please refer to the associated interest rate news release. Additional information on the rates of CSBs is also available on our Web site at www.csb.gc.ca and at financial institutions across Canada.

Interest rates for subsequent series of the CSB and the CPB with issue dates from December 1, 2004, to April 1, 2005 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.

Maturity Extension of CSB Series 47

The Minister of Finance has authorized the extension of the maturity date for CSB Series 47 to November 1, 2014. CSB Series 47 bondholders now have the option to hold on to their bonds and continue earning interest for up to 10 more years with no new paperwork. CSB Series 47 bondholders still have the option of redeeming their bonds at any time.

RRSP Option

The Canada RSP provides Canadians with the opportunity to purchase the CSB and the CPB 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, or transfer in-kind to, The Canada RSP is $500 per series.

Investments held in The Canada RSP do not have certificates; instead, statements outlining details of the investments held in the Plan will be issued to the owner.

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. Bonds can also be purchased in The Canada RSP through the Payroll Savings Program if the employer selects the RRSP option.

The trustee for The Canada RSP is The Canada Trust Company. Canadians can contact the trustee by calling 1 800 575-5151 (between 8 a.m. and 8 p.m. Eastern Time, Monday to Friday) or writing to:

Canada Savings Bonds
Registered Products
P.O. Box 2390, Station D
Ottawa ON K1P 1K8

RRIF Option

The registered retirement income fund (RRIF) option gives Canadians the option of transferring funds held in their RRSP or RRIF (except locked-in funds) to The Canada RIF. The Canada RIF is a specially designed no-fee RRIF for holding the CSB and the CPB 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 and each payment is a minimum of $25. These payments are made on the first business day of every selected period. A CPB held in The Canada RIF can be redeemed at any time to facilitate regular periodic payments. In addition, lump-sum payments can be requested at any time for the CSB. For the CPB, lump-sum payments can be requested on the anniversary of the issue date and during the 30 days thereafter. All funds withdrawn from The Canada RIF are subject to income tax in the calendar year in which they are withdrawn.

Only C-bonds may be held in The Canada RIF. Investments held in The Canada RIF do not have certificates; instead, statements outlining details of the investments held in the fund will be issued to the owner.

The December 31 statement will indicate the annuitant’s legislated annual minimum withdrawal amount for the upcoming year.

Transfers to The Canada RIF can be arranged wherever Canadians bank or invest.

The trustee for The Canada RIF is The Canada Trust Company. Canadians can contact the trustee by calling 1 800 575-5151 (between 8 a.m. and 8 p.m., Eastern Time, Monday to Friday) or writing to:

Canada Savings Bonds
Registered Products
P.O. Box 2390, Station D
Ottawa, ON K1P 1K8

Redeeming Bonds

Customers may cash the CSB at any time.

Customers may cash the CPB on the anniversary of the issue date and during the 30 days thereafter. If the CPB is redeemed during the 30 days following the anniversary of the issue date, no interest will be earned for the period following the anniversary date.

The CPB may be redeemed at other times to facilitate regular periodic payments from The Canada RIF or 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.

No interest will be paid on the CSB 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, 2005, in the case of the November 1, 2004, bond issues). Interest will accrue monthly (except for the CSB purchased through the Payroll Savings Program), which means no interest is earned in respect of the calendar month in which bonds are redeemed. Interest accrues daily for the CSB purchased under the Payroll Savings Program.

For R-bonds (except non-certificated R-bonds purchased through authorized investment dealers), 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.

Certificated CSBs and CPBs may be redeemed subject to the terms and conditions of the bonds by contacting any authorized sales agent’s office in Canada and presenting the bond certificate and proper identification.

Non-certificated CSBs and CPBs purchased through an authorized investment dealer may be redeemed subject to the terms and conditions of the bonds by contacting the investment dealer holding the record.

CSBs purchased under the Payroll Savings Program may be redeemed by the owner 15 days following the date the Bank of Canada receives the regular payroll deduction from the employer. Redemptions can be made online at www.mybonds.gc.ca, or by calling toll-free 1 877 899-3599 between 8:00 a.m. and 8:00 p.m. Eastern Time, Monday to Friday.

Bondholders may redeem bonds in The Canada RSP and The Canada RIF subject to the terms and conditions of the bonds by contacting the trustee in writing. A CPB held in The Canada RIF is redeemable at any time to facilitate regular periodic payments. The minimum regular periodic payment amount is $25 per payment. As with other RRSP and RRIF investments, redemptions may be subject to withholding tax.

Register and Record of Holdings

Both the CSB and the CPB, except for non-certificated CSBs and CPBs purchased through authorized investment dealers, are registered as to principal and interest with the Bank of Canada. Investment dealers that are authorized to sell CSBs hold the record of holdings for non-certificated CSBs and CPBs that are purchased through them. For these non-certificated bond holdings, the bondholders’ primary rights and remedies are against the investment dealer holding the record, not the Bank of Canada.

Bonds may only be registered or recorded 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 Revenue Agency business number.

For purchases under the Payroll Savings Program, bonds may only be registered in the name of residents of Canada as follows: one or two individuals; in the name of the trust governed by The Canada RSP; and, upon transfer from The Canada RSP, in the name of the trust governed by The Canada RIF.

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

Denominations

Certificated bonds are offered in denominations of $300, $500, $1,000, $5,000 and $10,000. A $100 bond is available in compound interest form only.

Non-certificated bonds purchased through authorized investment dealers are available in multiples of $100 subject to a minimum purchase amount of $300 for R-bonds and $100 for C-bonds.

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 CSB or CPB is $500,000, respectively. A person may own CSBs and CPBs 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.

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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.