Tag Archives: CSBs

Lost Bonds? Can including them in an RRSP reduce the risk?

Do Bonds Belong in an RRSP?

If it reduces the chance that the Bond becomes a “Lost Bond”  I think that’s a good reason to include Bonds in an RRSP

canada-savings-bondsA recent blog post (April 24th)  caught our interest as posts from the Canadian Couch Potato often do. This particular post was whether or not Bonds should be held within an individual’s RRSP. You can link and read this post here  

The post gave a thorough analysis for readers to consider which including a lot of factors like bond interest being fully taxable (versus dividends/capital gains), asset allocation considerations, comparable yields, RRIF withdrawal rules, foreign tax withholding etc.

The post from Dan Bortolotti was a summary of the work that he and & Justin Bender did in their white paper on the subject  including their full methodology. Their white paper Asset Location for Taxable Investors can be found here 

Again, Dan and Justin’s conclusions were based on a multitude of factors but they concluded that, it would have been preferable to hold bonds in an RRSP during the last decade. Those factors all need to be considered or re-considered going forward. But, I would like to humbly offer another factor going forward for their consideration…the risk of actual physical loss of the Bonds …will keeping the bonds inside an RRSP reduce the risk of them being lost all together ?

Because, the fact is that too many bonds are being lost and ending up unclaimed.

As of last December, the Bank of Canada has $420 Million in Unclaimed/Matured Canada Savings Bonds waiting to be claimed. Earlier this month, I received confirmation that Ontario had $64 Million in Unclaimed/Matured Ontario Savings Bonds as of March 2013, waiting to be claimed.

In both instances, there is no one within the Government looking for those owners. I have volunteered to do so. We will see if they accept my offer because I find it tragically sad that Canadian investors are losing track of their hard-earned financial assets including Bonds. What makes matter worse is that the Unclaimed interest earned by those bonds has most likely been taxed along the way. (Yes, It would be interesting to know if the T5’s reached the bond owner directly or if their returns were reassessed for that interest)

Assumption Alert

I’m going to make an assumption here that there is a better chance that an individual, a loved one or an executor will have a better chance of finding and locating an RRSP than a Bond certificate that could have very well been lost, destroyed, or misplaced somewhere along the way to it maturing. So…on the basis of that Assumption I think Bonds do belong in an RRSP. 

Dear Bank of Canada: Some concerns about your Annual Report 2013

The Bank of Canada released their Annual Report for 2013 today. Perhaps you missed it. Perhaps you have not had the time yet to read it. I certainly don’t want to ruin your fun hence, I have noted this post with the far too popular Identifier: Spoiler Alert

After reading the report, (where do I find the time?) I have to say that I’m glad I took the time because I have 2 BIG concerns & I thought they were both worthy of sharing and worthy of a response from the Bank of Canada.

If you guessed that they have something to do with Unclaimed Balances by now ; You would be correct; because yes; I’m a little more than obsessed about this issue for the sake of Canadians and their families.

Reference Page 14 of 97

The 2 items that concern me come right after the explanation of what Unclaimed Balances are and where they come from. For your convenience I have flipped it around, so that part is copied below

Concern 1: Other Unclaimed amounts like Matured Canada Savings Bonds ($420M) and unclaimed bank balances held in a foreign currency 

The report notes: “At the end of 2013, the Bank was the custodian of 1.4 million of these accounts”  (in reference to unclaimed accounts transferred from federally chartered banks after 10 years of inactivity) “which had a total value of approximately $533 million.” 

That’s a very big and sad number and unfortunately, correct per the database noted on their website. But what about Unclaimed but Matured Canada Savings Bonds

According to recent email Correspondence I have from the Bank of Canada, the balance of Unclaimed Canada Savings Bonds was $420M at the end of Dec 2013.

I see the $532.7 in unclaimed balances specifically referred to on the Balance Sheet (Page 69) but there is no explanation about Canada Savings Bonds; the ones that individuals and families for the most part, could really use. Are they included in the $774.2M in “Other” liabilities immediately under “Unclaimed Balances” ?

I am also curious about what the value of Unclaimed bank balances that are held in foreign currency might be given that the value of those accounts are not included in the $532.7M nor on the Bank of Canada website. I’m not sure why that would be given that it seems reasonable that the Bank of Canada could convert these balances into a Canadian equivalent but nevertheless…I would very much appreciate your insight on the value of such accounts and where that amount is included in the Annual Statements.

As an accountant, I have to say that $774.2M seems like a really BIG number to define as “Other” I think it’s reasonable to have more insight into what this value of $774.2M is comprised of. Perhaps it includes  the Unclaimed balances referred to above; but I would also appreciate more insight into this balance of $774.2M.

Concern 2: The Bank of Canada inappropriately paid out $1.6M in error (?) during 2013 ?

“During 2013, the Bank discovered that $1.6 million had been inappropriately paid
to an organization as a result of multiple claims submitted by that organization.
The Bank has taken action to recover the funds, and the accounts have been
reinstated on the UCBS registry.”

“As a result, the Bank undertook a review of its processes for administering claims
for unclaimed balances. Procedures have been strengthened, particularly those
related to the processing of complex multi-account claims made by corporate
entities, which have a greater risk of error.”

So the Bank of Canada, the Head of all of our Banks; the lead in promoting stability and efficiency in our financial systems & the necessary control policies for our banking system (and us essentially) and the Bank that works on behalf of all Canadians to reduce their risk. ….made an error of $1.6M ?

Doesn’t ANYONE know how to do their job anymore? This is not a confidence builder…

My inquiry into these concerns has been sent to the Bank of Canada…I will of course share any/all insight when they follow-up and I hope they certainly do.

Oh Yes. Here’s the explanation that is standard fare in explaining what Unclaimed Balances are according to the Bank of Canada (And the Bank of Canada does not look at Matured but Unclaimed Canada Savings Bonds as just that)

An “unclaimed balance” is a Canadian-dollar deposit or negotiable instrument,
issued or held by a federally regulated bank or trust company, which has been
inactive for a period of 10 years and whose owner cannot be contacted by the
institution holding or administering it. It can be in the form of a deposit account,
bank draft, certified cheque, deposit receipt, money order, GIC, term deposit,
positive credit card balance or traveller’s cheque.
These balances are turned over to the Bank of Canada, which acts as custodian
on behalf of the owners. Balances are transferred to the Bank of Canada once a
year, on 31 December.
Under its unclaimed balances service (UCBS), the Bank of Canada holds unclaimed
balances of less than $1,000 for 30 years after they have been transferred to the
Bank. Balances of $1,000 or more will be held for 100 years. If the balance remains
unclaimed at the end of the prescribed custody period, the Bank of Canada transfers
the funds to the Receiver General for Canada.
Owners of these accounts can claim their money if they are able to provide
proof of ownership. Over the past 10 years, the Bank has paid out approximately
$135 million to claimants representing about 75,000 unclaimed balances, the
largest account being $600,000. In addition, during this time frame, the Bank
transferred $15 million to the federal government.


Canada – 34 Million people but Billions in Unclaimed Funds ?

$320M  Now…$500M* in the Bank of Canada (5 year change)

$125M Now    $259M*   in Matured CSBs (5 year change)

LegacyTracker Poster



+ 20-30% of insurance policies + Pension Funds + Shares + Bonds +

Safety Deposit Boxes + Security Deposits + Credit Union Accounts + Stocks + Dividends + Corporate Bonds + Pension Accounts + Trust Accounts + Prepaid Funeral Deposits + etc. etc.

Estimated Total:

 $4B-$6B (Canada) ?

No one knows for sure

That’s part of the problem