What are Ontario Savings Bonds?

Ontario Savings Bonds are savings bonds that are issued by the Canadian province of Ontario. Both the interest and principal of these bonds are backed by the province. For people or groups in the province, Ontario Savings Bonds are available at banks or credit unions or by contacting an investment dealer. There are three kinds of Ontario savings bonds, all of which are available with annual or compound interest.

Fixed-rate Ontario Savings Bonds can be purchased at a three-, seven- or 10-year term. Fixed-rate bonds keep the same competitive rate for the full term. Step-up rate bonds have a competitive interest rate that increases each year for its five-year term. Variable-rate bonds have a new interest rate set every year for three years.

The purchase of Ontario Savings Bonds is limited. Eligible investors include individuals who reside in Ontario and corporations, non-profit associations and organizations that have a permanent establishment in Ontario. A beneficiary of a registered retirement savings plan, employee benefit plan, registered education savings plan or registered pension plan will qualify for ownership eligibility as long as the beneficiary resides in Ontario or has a permanent establishment in Ontario.

When Ontario Savings Bonds mature, they stop earning interest. After the savings bonds mature, bonds can be redeemed at a Canadian financial institution where the bondholder has an account. Some Canadian financial institutions allow bondholders to roll mature bond proceeds into a new, current year bond. In cases where bonds are lost, stolen or destroyed, the register will issue a new bond as replacement at the request of the bond holder.

More than one individual can purchase a bond. The principal and interest of the mature bond will be paid to all joint holders of the bond, unless the joint holders provide written instructions to the financial institution to do otherwise. If one of the joint holders of a bond is deceased, that joint holder's share of principal and interest is paid to his or her survivors or survivor.

There is a maximum limit on Ontario Savings Bonds. When the bonds are jointly owned, the maximum limit is calculated by multiplying the amount by the number of joint owners. The province has the right to redeem any bonds that are purchased in excess of the specified maximum ownership limit.