The Help to Save scheme will be available to anyone in work and in receipt of Universal Credit or Working Tax Credits. Account holders will be able to save up to £50 a month and receive a 50% bonus after 2 years – worth up to £600.
They can then choose to continue saving under the scheme for a further 2 years and receive another £600 bonus.
This will see them earn a savings pot worth up to £3,600 after the full 4 years of the scheme – with £1,200 coming from the government.
Chancellor George Osborne said:
"Our new Help to Save scheme will mean millions of low income savers across the country could now receive a government bonus of up to £1,200 to help them build up their savings.
"Alongside our new National Living Wage, we’re also boosting pay for young workers with increases in the National Minimum Wage – the next step for the next generation as we move to a higher wage society."
Andy Cumming, head of Advice at Close Brothers Asset Management, commented:
“A worryingly low proportion of the UK’s population is putting away sufficient savings for a rainy day – let along long-term goals like retirement. Setting aside a monthly amount can be much more challenging for lower paid workers, with longer-term planning falling victim to short-term priorities. The creation of this scheme is not a panacea in its own right that will mean that workers on smaller incomes will suddenly be able to prioritise building their savings. However, it will provide a welcome nudge for many, rewarding and encouraging financial prudence and the practice of saving little and often. Any steps that encourage individuals to consider their financial circumstances and think ahead for the longer term are steps in the right direction.”
