The federal government says it won't phase out its Canada Savings Bonds program, which has helped Canadians build nest eggs since 1946, despite a consultant's report that says the move could save $650 million.

Finance Minister Ralph Goodale says the program will be reviewed and revamped.

The federal government hired Cap Gemini Ernst & Young to assess the performance of the bond program, which is a key part of Ottawa's retail debt program.

When the program was introduced after the Second World War, one major goal was to provide the government with money to finance its debt while allowing Canadians to save money in a secure investment.

"With its share of overall government debt falling, Canada's retail debt program has lost its importance as a source of funds to government," said the consulting company's report, completed in late January but not released until Thursday.

It noted that Ottawa has run surpluses since 1996.

Cap Gemini said getting rid of the bonds would save the government $650 million over nine years.

More than 3.5 million Canadians still hold Canada Savings Bond products, though in recent years their popularity has dropped along with the interest rates offered on them.

In the late 1970s and early 1980s, the bonds held rates of return that soared to 19.5 per cent.

The current series of instantly cashable savings bonds generates a minimum guaranteed rate of 1.25 per cent annually. Canada Premium Bonds, which can be redeemed only in one month a year, have a rate of 2.0 per cent in year one, building to 4.0 per cent in year five.

Increasingly, investors have turned to more risky but potentially higher-earning mutual funds, stocks and bonds.

In 2003, they held CSBs worth $22 billion, compared to $470 billion in mutual funds and about $400 billion in personal bank deposits.

"The option of eliminating the Canada Savings Bonds Program is not on the table as part of this review," Goodale said in a statement as his department released the consultant's report. "We are looking to update and improve our retail debt strategy, not to end Canada Savings Bonds."

He said the government could choose among options that include:

• Offering more competitive rates on the existing bonds.
• Letting the private sector sell the bonds.
• Eliminating the regular bonds and offering only the premium variety.

Meanwhile, the newest series of savings bonds will go on sale as planned on Oct. 4, Goodale said.

When he was finance minister in 1998, Prime Minister Paul Martin launched a campaign aimed at selling more Canada Savings Bonds, saying the government needed to repatriate more of its huge debt.

But the report released on Thursday said the program has cost more than $1 billion since 1997, including operational expenses, and called the bonds a more expensive source of funds than other measures available to the government.