The government has announced the launch of its Help to Save scheme.
The scheme allows certain people entitled to working tax credits, or receiving universal credit, to get a 50p bonus for every £1 they save over a four-year period.
Those enrolled in the scheme receive the bonuses at the of the second and fourth years, and the amount is based on how much has been saved, and a maximum of £50 can be saved each calendar month.
Furthermore, Help to Save is backed by the government, meaning that all savings in the scheme are secure. Savings can be paid into the account via debit card, standing order or bank transfer, and enrolees do not have to pay money in each month.
Commenting on the scheme, Aegon head of pensions Kate Smith said: “We welcome the launch of the government’s Help to Save scheme, potentially helping around 3.5 million people build up a rainy day fund. By targeting people in receipt of working tax credits or universal credits the scheme has the potential to make more people more financially resilient.
“Although the scheme only runs for four years, getting people in the savings habit will ultimately help them in the longer term and hopefully encourage them to consider other savings such as workplace pensions and ISAs. In the current low interest rate environment, cash saving won’t always feel rewarding, but with the government bonus, this scheme is very attractive.
“The government trial ran for eight months, where 45,000 individuals saved £3m, averaging only £66 per person. When the government bonus is added this will be just short of £100. Although this is a good start, we would encourage people to save more to maximise the government bonus as the scheme has a very limited shelf life, particularly as savings won’t be tied up.”
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