Half a million low-income savers to get up to a 50% Government boost
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More than half a million low-income savers are in line to get a boost to their savings pot from the Government.
The 'Help to Save' scheme is now open to anyone working and receiving Universal Credit.
This means that the scheme will be open to 550,000 more people, HMRC announced today.
Help to Save is a type of savings account which was launched by the Government in 2018. It helps low-income people who receive certain benefits to build a savings pot by paying a bonus of 50p for every £1 they save over four years.
Savers can put away between £1 and £50 each month. They don't have to pay money into the account every month.
It means those tucking away the maximum £50 a month can get a £25 Government top-up, with bonuses paid in the second and fourth years of the account being opened.
Savings boost: More than half a million low-income savers are in line to get a bonus to their savings pot from the Government
Savers who deposit the maximum amount of £2,400 over four years will receive a bonus totalling £1,200 into their bank accounts, with payments coming at the end of the second and final year.
The scheme was due to end in September 2023 but was extended to April 2025 and has now been extended until April 2027.
One in five Britons has less than £100 in savings, newly released DWP data for 2023/2024 shows.
The scheme is one way those with very little income can begin to build up a savings pot and financial resilience.
It has seen 93 per cent of savers paying in the maximum £50 every month to their Help to Save account.
Some 516,000 Help to Save accounts were open at the end of April 2024 with the total value of deposits reaching £492.5million, amounting to an average of £953 each.
Looking at Britiain's biggest savers, by contrast, there is an astonishing gap between those who have the least in savings and those who have the biggest pots.
Of Britain's biggest savers, 12 per cent have between £50,000 and £200,000 saved, 3 per cent have between £200,000 and £500,000 and two per cent have £500,000 or more in savings.
Other ideas have been mooted for how people who struggle to build even the most modest rainy day fund could be helped.
These include being auto-enrolled into a £1,000 rainy day easy-access cash fund alongside pensions.
It could be created from increased pension contributions, and as soon as it hit £1,000 any surplus would be diverted into people's retirement pots, as proposed by think tank the Resolution Foundation.
Or a Lifetime savings plan, as put forward by fund manager Schroders and the Pensions Management Institute.
This could build on workplace pension saving, helping people build an emergency savings pot as well as longer term goals like saving for a home deposit.
Economic Secretary Emma Reynolds said: 'We want more people to have a bit in the kitty for a rainy day, which is why we are giving hundreds of thousands more working families on tight budgets access to this support.'
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