New sales period and RSP regulations
October is Canada Savings Bond (CSB) month and this year a new paperless campaign, Click CSB, is being launched.
The program is streamlining processes and acting more in tune with environmental concerns. The number of paper applications distributed will be reduced from one million during the 2009 campaign to approximately 10,000 in 2010, with the launch of Click CSB.
What does Click CSB mean for campaign directors and employees?
Click CSB simplifies operations and transactions by providing a single point of contact for all online services. There are three steps to CSB online purchases:
Step one: In early October, campaign directors receive their organization ID and a campaign kit containing posters, employee how-to guides and other promotional materials. This information and material is distributed to employees.
Step two: During the month of October, employees go to http://csb.gc.ca to buy bonds or change their contribution amounts.
Step three: In early November, campaign directors go to http://csb.gc.ca to download their employee payroll data file, an updated list of purchases and modifications completed by employees during October.
Program changes
Three changes will come into effect in October 2010.
First, the sales period will be streamlined from six months to two months. Although the payroll savings program ends on Oct. 31, 2010, CSBs can still be purchased from many participating financial institutions or online.
Second, new customers will no longer be able to open a government-sponsored retirement savings plan (RSP) or retirement income fund (RIF).
Existing RSP/RIF bondholders will not be affected by this change and all Canadians will still be able to hold CSBs and Canada Premium Bonds (CPBs) in their self-directed RSPs/RIFs.
Third, the Government of Canada will no longer be extending matured series as they had been doing the last several years. CSB owners will receive a letter advising them of their bonds maturity and providing options for reinvesting in current series or redeeming their matured bonds.
Canada savings bond history
In 1946, the Government of Canada launched the CSB program with CSB series one. Thus began Canada’s long and enduring relationship with savings bonds. Previously, war savings bonds (also known as victory bonds) were issued by the government to help fund the war effort.
Whether it be on posters in employee lounges or on radio and TV commercials, every October since 1946, the CSB marketing campaign has appeared to remind Canadians that the season has arrived.
Every year, Canadians from across the country have answered the call and purchased bonds to achieve their savings goals.
From generation to generation, sometimes as gifts to children and grandchildren alike, CSBs are a Canadian tradition for families working towards important life goals such as buying a house, a car or saving for a college education.
To this day, one out of every 11 Canadians own a CSB and more than 11,000 companies participate in the CSB payroll savings program.
The evolution of CSBs
CSBs have evolved over the years. Early series were issued as certificated bonds with attached coupons. Bondholders could redeem the coupons annually or wait until the maturity date for an added incentive.
Companies participating in the payroll savings programs would obtain a consolidated loan from a chartered bank to cover the cost of bonds purchased by their employees. Employees would then reimburse the company through their payroll deductions. Every October, employees would re-enroll to purchase the next available series of bonds.
In 1997, major changes were introduced to CSBs and a new payroll savings program was launched. Non-certificated bonds, direct deposit payments and one-time sign-up for employees were introduced to significantly reduce program costs.
Bypassing chartered banks to redeem their CSBs and an automatic renewal enrollment process proved to be very popular with employees who appreciated these added conveniences. The demand for more online access continued to grow and the program complied by adding online services for employees and employers alike.
And the survey says…
During a session hosted by the Bank of Canada on July 8, 2010, at the Canadian Payroll Association’s annual conference in Toronto, participants were asked to complete a short survey about Canada Savings Bonds.
•56 per cent: Number of participants who think the CSB payroll savings program is very important.
•52 per cent: Number of participants who think their organizations offer the program to help employees save.
•84 per cent: Number of participants who think employees subscribe to the program because it’s an easy and convenient way to save money.
•62 per cent: Number of participants who think the major benefit of the CSB payroll savings program is the convenience of payroll deductions.
