For this week’s Savings Guide, Anna Bowes, personal finance expert from The Private Office, explains what the Help to Save scheme is…
The Help to Save Scheme is essentially a programme that incentivises people claiming certain benefits to save money.
It gives savers a generous government bonus if they put away between £1 and £50 a month over four years.
Unlike a normal savings account, no interest is earned.
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But at the end of the first two years, the government pays a bonus worth 50% of the highest balance you have achieved during that time.
So, if you have paid in the maximum £1,200 over the first two years, you would get a bonus of £600.
After four years, you get another bonus of 50% of the difference between the highest balance achieved during the first two years and the highest balance during the third and fourth years.
Here are a couple of examples:
• If the highest balance after the first two years is £1,200 and the highest balance in the third and fourth years is £1,800, the bonus will be calculated on the £600 difference. So, in this case, you’ll get a second bonus of £300.
• If you manage to save the maximum £50 a month once again, after four years you’ll have saved another £1,200, so assuming you’ve not made any withdrawals, the highest balance will have reached £2,400, so you could receive another £600 bonus payment. In total, that could mean up to £1,200 in free money over the life of the account.
Although unlike some schemes, you are not locked in – you can withdraw your savings at any point – but doing so will affect your bonus.
“The generous bonus is a great incentive, but of course only to those who can afford to save to get it,” Bowes says.
“For those that are on the lowest incomes, they may struggle with the day-to-day cost of living, let alone putting money aside in a savings account, but if they can afford to utilise the account, the bonus is a great incentive.”
She adds that…
