Government Help to Save Scheme for low paid 96% undersubscribed
A few days ago, I talked about how women are saving a lower proportion of their income than men. Today I discover that savers are failing to take advantage of a new UK Government scheme, as figures reveal that more than 96% of those eligible are missing out on a 50% top-up bonus worth up to £1,200.
The Help to Save account, launched last September, was designed to encourage people on low incomes to save for their future. However, statistics released by HM Revenue & Customs show that only 132,000 of the 3.5 million people eligible have opened an account.
The scheme allows people on welfare benefits, such as working tax credit and universal credit (combined with certain level of household income) to save up to £50 a month, or £600 per annum, for four years, which will be topped up by the Government by 50p for every £1 saved.
The Help to Save accounts can be held for four years, with a maximum of £2,400 saved with a further £1,200 paid in by the Government.
Anna Bowes, of Savings Champion, the comparison site, told the Telegraph that whilst the Government should be encouraging people to save she was not surprised by the low take-up.
“A lot of this group will not have any spare money to save so it’s not surprising that there’s not been a huge take-up,” she added. “For a lot of people on lower incomes, saving and investing aren’t going to be very high on their list of priorities. That being said, it’s encouraging to see 132,000 people have been able to take advantage.”
Ms Bowes questioned how well the scheme had been publicised, since most people have no idea it exists.
But HMRC argue that account holders were already eligible for £14m in bonuses. Tax free bonus payments are allocated every two years. Claimants can only open one account.
John Glen, the economic secretary to the Treasury, said: “Saving shouldn’t be seen as a luxury but as an essential part of planning for the future.
“That’s why I launched the Help to Save scheme last year, and it’s been great to see so many people using it to put money aside for themselves and their loved ones.”
The scheme looks attractive, but is being sold to a market which is short on cash. The fact that someone qualifies for a benefit would indicate that they have very little or no spare money.
Word of the Day
Universal Credit is a state benefit which is replacing 6 other benefits with a single monthly payment if you’re out of work or on a low income
Universal Credit will replace the following benefits:
- Child Tax Credit
- Housing Benefit
- Income Support
- income-based Jobseeker’s Allowance (JSA)
- income-related Employment and Support Allowance (ESA)
- Working Tax Credit
If you currently receive any of these benefits, you cannot claim Universal Credit at the same time.
Universal Credit is being introduced in stages across the UK. You do not need to do anything until you hear from the Department for Work and Pensions (DWP) about moving to Universal Credit, unless you have a change in circumstances.
Universal Credit is still being rolled out across the country, but has been criticised by landlords with tenants on housing benefit for being slow to start.
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