Investments

Savings bonds are five-year securities issued by the Central Bank of Barbados on behalf of the Government of Barbados. Savings bonds are sold at a discount, which means that investors pay less than the nominal value of the savings bonds but receive the full value when they have matured. As an example, for a savings bonds issue with a yield to maturity of 5.5%, the purchase of $500 (nominal value) would require an investment of only $381.20, and the purchaser would receive the full nominal value ($500) when the savings bonds mature.

Because savings bonds are a low risk investment; purchasers know exactly what their return will be when the savings bonds reach maturity. Moreover, the interest earned during the investment period is tax free. Savings bonds are liquid investments, so in the event that a bondholder wishes to surrender some or all of his savings bonds he can do so by taking the certificate(s) to a commercial bank along with photo ID and will receive his initial investment in addition to any interest that his savings bonds accrued during the period he held them. (Link to Schedule of Surrender Values) In addition, people who invest refunds of pension plan contributions in savings bonds and hold them for the full five years are not required to pay withholding tax (25%) on that money. Savings bonds can also be used as collateral for loans.

Barbadians and permanent residents 18 years and older may invest in savings bonds for themselves or their children. Credit unions, registered charities and friendly societies are also allowed to purchase savings bonds.

Savings bonds are offered several times a year. Whenever the Central Bank is issuing a series, it will place ads in the local newspapers as well as on its website, Facebook page and Twitter feed.

Savings bonds can be purchased at all local commercial banks. Persons who are investing money from refunded pension plan contributions should come directly to the Central Bank, however. Purchasers are required to complete an application form and make payment. Shortly thereafter, they will be issued with their certificate.

The minimum nominal value of savings bonds that can be purchased is $50 per series. For a series with a yield to maturity of 5.5%, the investment required for this would be $38.12. The maximum nominal value of savings bonds that can be purchased per series by an individual or organization is $100,000 and for joint holders $200,000. For a series with a yield to maturity of 5.5%, the investment required for this would be $76,240 for individuals/organizations and $152,480 for joint holders. Nb. For series issued before 2015, the maximum nominal value is $50,000 for all categories of bondholder.

Savings bonds mature five years after the date of purchase. At that time, the bondholder will receive the nominal value of the savings bonds.

Yes. In the event that persons wish to surrender their savings bonds, they should take the certificate(s) to a commercial bank along with photo ID and they will be refunded their initial investment as well as any interest that has been accumulated during the period the savings bonds were held. The rate of interest persons surrendering their savings bonds receive is determined by the length of time they held the savings bonds. (Link to Schedule of Surrender Values)

When savings bonds mature, or in the event that persons wish to cash in their savings bonds, bondholders should take their certificate(s) along with photo ID to a commercial bank to receive payment.

Yes. The interest on savings bonds is tax exempt on holdings of up to a maximum of $100,000 nominal value for individuals and organizations and $200,000 for joint holders (for series issued beginning 2015). For series issued prior to 2015, the maximum is $50,000. Money from refunded pension plan contributions that has been invested in savings bonds is exempt from withholding tax as long as the bondholder holds the savings bonds to maturity.

Savings bonds are non-transferable except in the case of the death of a bondholder.

In the event of the death of a bondholder, his savings bonds are transferred to his beneficiary (as stipulated by a will or Letters of Administration). Savings bonds received through inheritance are excluded from the maximum value limit. In addition, savings bonds may be transferred to a non-Barbadian or non-permanent resident when that person is the beneficiary of the deceased bondholder. Where the savings bonds were held jointly with another person, the surviving bondholder receives full ownership of the savings bonds.

If a bondholder loses a certificate, he can be issued a duplicate certificate if he presents a sworn affidavit stating that the original certificate has been lost and agrees to indemnify the Central Bank of Barbados against loss in the event that the certificate is later found and presented for payment. The bondholder must also place two ads announcing the lost savings bonds in one of the daily national newspapers.

Although savings bonds, treasury notes and debentures are all Central Bank issued securities, there are several differences between them:

Terms of Purchase Savings bonds are purchased at a discount, meaning that investors pay less than the nominal value and receive the full amount upon maturity, while treasury notes and debentures are sold at par, i.e. investors pay the full amount at the time of purchase.

Interest Payments Interest on holdings of savings bonds is accumulated throughout the five-year period they are held but only paid upon maturity or if the bondholder wishes to surrender them prior to that time. When savings bonds are surrendered before maturity, the bondholder is accorded interest based on the length of time the savings bonds were held. Interest on treasury notes and debentures is paid bi-annually.

Length of Investment Savings bonds are five-year securities, while the investment period for both treasury notes and debentures varies. The investment period for treasury notes can vary from one to 10 years and must be more than 10 years for debentures.

Minimum and Maximum Investments Savings bonds can be purchased in a range of nominal values from a minimum of $50 to a maximum of $100,000 ($200,000 for joint holders) per series. They must be purchased in nominal value increments of $50, e.g. $250, $300. The minimum investment for both treasury notes and debentures is $1,000 and all purchases must be in multiples thereof. There is no maximum investment for treasury notes and debentures.

Taxes The interest on savings bonds is tax exempt on holdings of up to $100,000 for individuals and organizations and $200,000 for joint holders, while the interest on treasury notes and debentures is subject to 12.5% withholding tax except for pensioners 60 years and older.
,br> Transferability Savings bonds are non-transferable except in the event of the death of a bondholder. They can, however, be surrendered at any time prior to maturity. Treasury notes and debentures are tradable on the Barbados Stock Exchange but cannot otherwise be surrendered before the end of the maturity period.