Wednesday, 12 September 2018
Help to Save Scheme Launched
An area that has concerned me for some time is the proportion of people in the UK who have little or no savings. A large number of people borrow to make ends meet. According to The Money Charity, the average household currently pays over £1,800 p.a. interest each year on personal loans and outstanding consumer credit lending is £213 billion.
In an effort to address this culture, the Government have this week launched their new saving initiative which is aimed at workers in receipt of tax credits or universal credit.
People can save anything between £1 and £50 per month and will receive a bonus of 50% on the sum saved after two years. So someone saving the max. of £1,200 would receive an additional £600. If they continue for a further two years they would get a second tax-free bonus of 50%.
Withdrawals can be made at any time but bonus payments could be affected.
This should be a help to many thousands of families on low incomes and hopefully help them to build a useful cash reserve and importantly get them into the habit of saving regularly and taking responsibility for their finances.
The debt charity Step Change welcomed the launch of the scheme. Its chief executive, Phil Andrew, said: “We campaigned for help to save and it is a good scheme. Ninety-eight per cent of our clients have no savings at all at the point they turn to us, and only 1% have £1,000 or more. Yet we know that having £1,000 in rainy day savings virtually halves the risk of falling into problem debt, so helping lower income working households to build savings should be an important policy goal.”
It is estimated that over 3 million people would qualify for this savings scheme. The scheme will be available for the next 5 years.