The Financial Inclusion Commission welcomes the confirmation in today’s Budget that the Government will introduce a Help to Save scheme aimed at those in low-income groups, as well as a new Pensions Dashboard, which will allow people to better plan for their retirements. Both policies are welcome moves, and follow sustained campaigns by the Commission on these issues.
Given the changing nature of work, saving for pensions can become confusing, and the average person will move employers 11 times over their working life, meaning they could end up with 11 or more private pensions by the time they retire. The new Pensions Dashboard, with a digital interface will provide individuals a source through which they can manage their finances, and enhance their financial capability. The Commission recommended a Pensions Dashboard as part of its 2015 review into the Financial Health of the Nation, and we welcome its introduction today.
The new Help to Save Scheme will be available for claimants of Universal Credit and Working tax credits, and will allow savers to aside up to £50 a month, and then claim a 50% bonus on their balance after two years. The Commission has consistently advocated for a scheme of this kind, which is embedded with Universal Credit, and encourages savings amongst those on low incomes. We welcome the incentives the government has put forward to encourage savings, which will help people meet unexpected demands, smooth peaks and troughs in income and spending, and limit the need for borrowing.
Research undertaken in 2015 by the Commission suggests that matched savings schemes like what is proposed for Help to Save have a positive impact, with 65% of people making further contributions after accruing the maximum match funding.
“We support the introduction of a Help to Save Scheme and a Pensions Dashboard, confirmed in today’s Budget,” said Chris Pond, former Work and Pensions Minister, and Vice Chair of the Financial Inclusion Commission. “These are steps in the right direction, as incentivising savings for low income groups and facilitating people’s access to pensions, will enhance financial inclusion and improve people’s resilience against financial shock.”