Thousands sign up to Help to Save to earn 50p for every £1 saved
More than 132,000 Help to Save account holders are eligible for bonuses totalling £14m.
Savers have deposited more than £31.4m in government-backed Help to Save savings accounts.
The accounts offer working people on low incomes a 50 per cent bonus on what they save – rewarding them with 50p for every £1 they put away. Over four years, a maximum bonus of £1,200 is available on savings of up to £2,400.
Government figures show that those using Help to Save accounts are already eligible for bonuses totalling about £14m.
John Glen, 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.
“Around 3.5 million people could benefit from the scheme, so if you’re eligible but haven’t yet opened an account, you should take a look. Saving comes with a 50 per cent government bonus, and even a small amount could help you to be more prepared for the future.”
Help to Save helps those on lower incomes build up a ‘rainy day’ fund, and encourages a long-term savings habit. How much is saved, and when, is up to the account holder, and they don’t need to pay in every month to get a bonus.
The accounts are available to working people on tax credits, or Universal Credit claimants with a minimum earned income equivalent to 16 hours per week at the national living wage in their last assessment period.
Account holders can save between £1 and £50 every calendar month and accounts last for four years from the date the account is opened. After two years, savers get a 50 per cent tax-free bonus on the highest balance they’ve achieved.
If they continue saving, they could receive another 50 per cent tax-free bonus after a further two years. On maximum savings of £2,400 over four years, the overall bonus would be £1,200.
Kate Smith, head of pensions at Aegon, said: “It’s encouraging to see growth in the number of people utilising the benefits of the government’s Help to Save scheme. At a time when interest rates on easy access cash savings are little more than 1 per cent, receiving a 50p top up from the government for every £1 you save is a very attractive offer for eligible savers. The scheme will help people develop healthier saving habits and in the long term will hopefully inspire them to consider other savings such as workplace pensions and ISAs.
“Today’s figures indicate that on average those who have taken up the scheme have saved around £238 per person and will then benefit from a 50 per cent tax-free bonus. 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.
“The only downside here is that just 3.7 per cent of those eligible are taking advantage of the scheme. Saving on a low income can be challenging but there are 3.5 million who could potentially benefit from these Help to Save accounts and a real push is needed to drive awareness and sign ups. Increasing take-up will make a real impact on financial resilience among people in the UK.”