Unlocking Savings: How the Government's Help to Save Scheme Is Expanding Opportunities for Low-Income Families
The Help to Save scheme is set to undergo significant changes that will enable more low-income individuals to benefit from this government initiative, according to the Treasury. Currently, approximately 3 million people receiving universal credit are eligible for the scheme, which incentivizes saving by offering a government bonus of 50p for every pound saved, paid out after two and four years. The recent announcement reveals that starting in 2028, an additional 1.5 million parents and carers will qualify for the program, which will also be made permanent, extending beyond its original 2027 end date.
Key Details of the Help to Save Scheme:
To qualify for the scheme, participants must be on universal credit and have a take-home pay of £1 or more during their last assessment period.
Savers are allowed to deposit up to £50 per month, totaling £2,400 over a four-year period.
Bonuses are calculated based on the highest amount saved over the designated periods, with a potential maximum bonus of £1,200.
The expansion of this scheme is a crucial step towards helping individuals build savings, especially during emergencies. As part of the upcoming Budget, Chancellor Rachel Reeves is expected to propose a reduction in the cash ISAs (Individual Savings Accounts) annual limit from £20,000 to £12,000. This move aims to encourage more investments in stocks rather than cash savings, despite concerns that the new limitation could complicate the savings landscape and deter saving habits.
Industry Reactions:
Experts, including Robin Fieth, CEO of the Building Societies Association, have voiced concerns regarding the potential negative impact such restrictions could have on overall savings behavior. The scheme’s adjustments align with broader efforts to foster a culture of savings and investments, crucial for financial health and stability among low-income families.