MILLIONS of people on Universal Credit and other benefits are missing out on £1,200 from the government’s Help to Save Scheme.
Under Help to Save, you get 50p for every £1 you save up to a maximum bonus of £1,200 over four years, which means you’d need to save £2,400.
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Around 163,000 people have signed up to the initiative since its launch in September 2018, stashing away £53million in total according to new figures published today.
And while 30,000 more people are now saving under the scheme compared to last July, as 3.5million people are thought to the eligible, that means more than 3million are still missing out.
Sarah Coles, personal finance analyst at financial provider Hargreaves Lansdown, urges people to sign up before the accounts close to new joiners in September 2023.
She said: “Less than 4 per cent of those who are eligible for the scheme have taken advantage.
“But if you qualify, it’s worth taking the time to consider if there’s any way you can afford to put away any money each month.
“You can start from £1 a month, and the fact you can get your hands on the cash at any time means there’s no harm in trying.”
John Glen, economic secretary to the Treasury added: “Putting aside some money every month, even if it is only a small amount, can make the world of difference.”
Can I get a Help to Save account?
The account is only available to those on tax credits or to Universal Credit claimants who are earning at least the equivalent of 16 hours a week at the national living wage.
You can save between £1 and £50 every calendar month and accounts last for four years from the date opened.
After two years, savers get a 50 per cent tax-free bonus on the highest balance they’ve achieved and if they continue saving they could get another 50 per cent tax-free bonus after a further two years.
This is a much higher effective rate of interest then you’d earn with a regular savings account or bank account.
The top interest paying current account, for example, pays 5 per cent on up to £2,500, while the top easy-access savings and Cash Isa accounts both pay 1.31 per cent.
So that’s a respective £120, £31.44 boost on the equivalent £2,400 maximum pot – far less than the £1,200 you’d get from the government.
Cash in the accounts is protected by the government, and savers can also withdraw cash from the Help to Save account penalty free, although this may impact the bonus you earn on your savings.
How to apply for Help to Save
You can apply for an account via Gov.uk but you need a government gateway user ID and password.
If you do not have a user ID, you can create one when you apply.
For those who don’t have access to the internet, you can still get an account – just call 0300 322 7093.
Be aware that you’ll be asked to provide your bank details when you apply as the bonus is paid into your bank account rather than into the savings account.
