Low earners to get 50% savings bonus with Help to Save scheme

Published by Rachel Lacey on 12 September 2018.
Last updated on 12 September 2018

Low earners to get 50% savings bonus with Help to Save scheme

Low earners are to finally be given access to a new government savings scheme that offers generous incentives to put money away.

The Help to Save Account will top up every £1 saved by 50p – an effective 50% bonus on savings. Over a four-year period, the account will boost a maximum saving of £2,400 with a total bonus of £1,200.

The maximum that can be saved is £50 a month. The bonus is paid after two years of saving, but customers can continue the scheme for a further two years for another bonus payment if they wish.

The accounts, which will be administered by HMRC, will be available to working UK residents claiming working tax credits, child tax credits or universal credit.

The launch follows an eight-month trial, which saw more than 45,000 lower earners deposit more than £3 million.

The scheme was first announced by former Prime Minister David Cameron in January 2016 with a planned launch date of April 2018. However, the launch was delayed at the end of last year.

HMRC says savers should be able to open an account online in around five minutes. Accounts are flexible, allowing customers to set up standing orders on a weekly, fortnightly or monthly basis.  One-off payments can also be made online with a debit card.

Withdrawals can be made at any time, although this could reduce the level of bonus paid.

John Glen, economic secretary to the Treasury, says: “Savings shouldn’t be a luxury, they are an essential part of planning for the future. But for some, putting away even a tenner each month can be a tough habit to get into.

“Whether you’re saving up to take the family on a much-needed holiday, or to take the next step in life, Help to Save is designed to make saving possible for every hardworking person in this country.”

Just one in seven eligible likely to use scheme

The launch was welcomed by debt charity StepChange. Chief executive Phil Andrew says: “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.”

However, he adds that to be effective the government must make sure all eligible savers are made aware of the scheme as government impact assessments suggested the uptake would be low initially.

“We campaigned for Help to Save and it is a good scheme. Yet it will only bring benefits if people actually use it. The government’s impact assessment suggested only one in seven of those eligible are likely to use Help to Save in its first two to three years of operation.

“It’s vital for the government to make a real effort to promote the scheme if it is to have the desired result, and for all of us who work with eligible households to support that effort.”

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Do pensioners qualify if

Do pensioners qualify if getting just state pension, it could be a good way to save to pay for our own funeral or is it just another perk for the young. I thought those claiming benefits were poor and that is why they got benefits. Can't remember any of these perks when i was younger and low paid.

does that apply to low

does that apply to low earning pensioners as well ?.