What does this mean to Employers currently offering the “CSB – Payroll Savings Program” to their Employees?
What does this mean to Employees who are using this to help them save?
First and foremost, any un-matured CSBs are safe and guaranteed and the bonds will continue to be honoured until the time of redemption or maturity, whichever comes first.
Why is the government stopping this program? Quite simply, those looking to save have found better alternatives and the Government of Canada has found better ways to source funding.
To read more details, please follow this link: www.csb.gc.ca/2017/03/important-announcement-about-canada-savings-bonds-program/
Most Employees were using payroll CSB as a way to ensure savings (ie. the money is taken out before their income is paid to them). The convenience of payroll deduction is important for many. Most Employees are using the company RRSP/Pension Program to save for retirement. They were using CSB for short to mid-term savings with many having a specific goal (ie. vacation, reno, car etc.).
To help Employees maintain a convenient payroll program, we are suggesting looking at using a TFSA as the alternative. If you, or your company does not have a TFSA as part of your retirement program, please contact our office and we will review if this product is right for you.
Here is a quick glance summary chart of the similarities and differences between RRSP/Pension vs TFSA vs Canada Savings Bonds (see chart to the right).
Employees can benefit from using a TFSA instead of the current Canada Savings Bonds.
We encourage our Plan Sponsors to communicate the ending of the CSB and to consider alternatives. Please reach out to your Advisor for assistance.