14th March 2016
The government is looking to help kick-start savings with a £1,200 bonus for up to 3.5m people through its new Help to Save scheme.
With research showing that almost half of UK adults have less than £500 set aside for emergencies, in January, the Prime Minister David Cameron set out the government’s plan to transform life chances across the country.
Under the Help to Save scheme, anyone in work and in receipt of Universal Credit or Working Tax Credits will be able to save up to £50 a month and receive a 50% bonus after two years – worth up to £600.
Account holders can then choose to continue saving under the scheme for a further two years and receive another £600 bonus.
This will see them earn a savings pot worth up to £3,600 after the full four years of the scheme – with £1,200 coming from the government.
Speaking ahead of the Budget on Wednesday, Cameron said: “I’ve made it the mission of this government to transform life chances across the country. That means giving hard-working people the extra support they need to fulfil their potential.
“And that’s what these new measures will achieve – helping someone start a savings fund to get them through difficult times, giving people on low incomes a pay rise and making sure teenagers have the experience and networks to succeed.”
Chancellor George Osborne added: “This government is determined to improve the life chances of the poorest in our society and our new Help to Save scheme will mean millions of low income savers across the country could now receive a government bonus of up to £1,200 to help them build up their savings.
“Alongside our new National Living Wage, we’re also boosting pay for young workers with increases in the National Minimum Wage – the next step for the next generation as we move to a higher wage society.”
Commenting on the initiative, Danny Cox, chartered financial planner, Hargreaves Lansdown said: “Help lower earners to build a rainy day fund and a reduction in the reliance on payday lending should follow.
“Savings incentives clearly work, however the potential beneficiaries of these schemes will be the most hard pressed to get off the mark. Instilling the savings habit is not just about attractive products with low minimum contributions, there needs to be an education programmes alongside to promote the benefits of saving – a great habit where oak trees from acorns grow.”