Canada Savings Bonds Program Changes effective October 2012

The Canada Savings Bonds Program responds to the savings needs of Canadians

For more than 65 years, the Canada Savings Bonds Program has provided Canadians with a means to save for their financial goals in a way that is safe, convenient and free of charge. Starting in October 2012, changes will be made to Canada Savings Bonds and Canada Premium Bonds products to ensure the program is sustainable and relevant for Canadians well into the future.

Changes to the Canada Premium Bond

Canada Premium Bonds, which represent the majority of Canada Savings Bonds Program bonds sold through financial institutions and dealers, will be enhanced with a new cashability feature. The term to maturity will also be shortened to three years from 10 years.

Canada Premium Bonds will be cashable anytime

This new feature, effective 1 August 2012, will provide Canadians with improved access to their savings. Canadians who invest in Canada Premium Bonds will have the flexibility to redeem their bonds throughout the year with interest earned up to the last anniversary date of purchase. All outstanding Canada Premium Bonds will also benefit from this feature.

The term to maturity will be shortened to three years

The term to maturity of all new Canada Premium Bonds issued will be shortened to three years from 10 years to align with their three-year step-up coupon pricing and to make them comparable with other retail products.

Where to purchase Canada Premium Bonds

Canada Premium Bonds will continue to be available for purchase in the fall through financial institutions, investment dealers and by telephone.

Changes to the Canada Savings Bond

A focus on the Canada Savings Bonds Payroll Savings Program

Canada Savings Bonds will be offered exclusively through the Payroll Savings Program, which is dedicated to helping Canadians save for their financial goals. Over 11,500 employers across Canada participate in this program, enabling almost 1 million Canadians to save through payroll deductions for as little as $2 per paycheque.

The term to maturity of Canada Savings Bonds will be shortened to three years

The term to maturity of all new Canada Savings Bonds will also be reduced to three years from 10 years to provide Canadians with the opportunity to reassess their savings goals more frequently.

How to participate in the Canada Savings Bonds Payroll Savings Program

The Payroll Savings Program is offered to all Canadian employers free of charge. Employers wishing to participate in the Program can visit the Employers page.

Employees of participating companies can register online in October.

For more information:

General questions: 1-800-575-5151

For media inquiries only: 613-782-8782

Canada Savings Bonds Program Changes 2012

Quick facts about Canada Savings Bonds

• An estimated $9 billion of Canada Savings Bonds (CSBs) and Canada Premium Bonds (CPBs) will be held by investors by March 31, 2012
• Almost 3 million Canadians own a Canada Savings Bonds product
• Over 95% of CSBs sold are through the Payroll Savings Program
• 11,500 employers across Canada participate in the Payroll Savings Program
• Close to 1 million Canadians participate in the Payroll Savings Program

What changes are being made to the Canada Savings Bonds Program?

Beginning with the fall 2012 campaign, the Canada Savings Bonds Program will offer one product per sales channel, Canada Premium Bonds will be enhanced with a new cashability feature and the term to maturity of all new Canada Premium Bonds and Canada Savings Bonds will be shortened to three years from ten years.

Why make changes to the Canada Savings Bonds Program?

Changes will be made to the Canada Savings Bonds Program to improve the efficiency of the program and better align product offerings with the needs of today’s investors.

In an environment of increasing competition and low interest rates, the CPB has been enhanced with a new cashability feature in order to offer a more flexible product.

Over 95% of CSBs are sold through the Payroll Savings Program. Canadians value the ease of saving for their short-term goals in a way that is convenient and free of charge. Offering the CSB exclusively in the Payroll Savings Program responds to the way Canadians are using the Canada Savings Bonds Program.

How does the new cashability feature work?

The new cashability feature will allow Canadians to redeem their bonds anytime during the year without penalty. Beginning August 1, 2012 all outstanding and future CPB issues will become cashable at anytime with interest earned up to the last anniversary date of issue. This will allow Canadians to earn the higher interest rate offered by the CPB while also having access to their funds when they need them.

Are there any changes to my existing CPBs?

As of August 1, 2012, CPBs will become cashable anytime the bondholder chooses; however, interest will only be paid up to the last anniversary date of issue. All previously sold and still-outstanding CPBs will also benefit from this new feature. In addition, all new bonds sold will have a term to maturity of three years, shorter than the previous 10-year-term.

What does a shorter bond term (10 to three years) mean for me?

As of October 2012, all new CSBs and CPBs sold will have a three-year term to maturity. The shorter bond term, which is more in line with other comparable retail bank products, means that your bond will mature after three years instead of 10 years.

Will there be a change in the maturity date of bonds that I currently hold?

No. Your bonds will mature on the date specified or on the revised date if your bond series has been extended. You can find out if your bond has matured or remains outstanding by going to csb.gc.ca/home and clicking on ‘redemption value tables’ on the left-hand side.

Will there be any changes to my CSBs purchased before October 1, 2012 through financial institutions and investment dealers?

All outstanding CSBs will retain all accrued interest and product characteristics (e.g. cashable anytime) up to their maturity date as per the Terms and Conditions associated with the particular bond at the time of sale. Outstanding CSBs will continue to be repriced annually and earn interest up until their maturity. CSB interest rate information will continue to be available online at csb.gc.ca.

Will CSBs and CPBs continue to be priced separately?

Yes. CSBs and CPBs will continue to be priced separately. You can find interest rate information online at csb.gc.ca.

When I have a CSB that matures, will I be able to reinvest in a new CSB?

CSBs will no longer be available for sale through financial institutions, investment dealers or the CSB Customer Service Office as of October 2012. However, if your CSBs mature on the first of November or December, you will have the option of purchasing the new CPB issue for those months.

Do I have to redeem my CSB immediately since CSBs will no longer be sold by financial institutions or investment dealers?

No, you do not have to redeem your CSBs immediately and they will continue to earn interest until they mature. You can still redeem your bonds at your convenience regardless of the changes to the Canada Savings Bonds Program

I contribute to the Payroll Savings Program. Will these changes affect me?

The shorter CSB bond term does not affect your Payroll Plan. Since maturing bonds are automatically rolled over into the next available series along with the accrued interest, the new term to maturity will simply see the bonds maturing sooner and reinvested more frequently into the next available CSB series until the bonds are cashed.

I am a Campaign Director for the Payroll Savings Program where I work. (How) Will these changes affect me?

The changes to the Payroll Savings Program will not change the administration of the Program or how a Campaign Director runs a campaign. The Program still offers employees a simple easy way to save with no associated fees.