Industry service urges 7.5m workers to start saving
Around 7.5 million workers with no savings are being urged to put money aside every month in a new industry initiative.
As a nation, we are saving less. In the last quarter of 2019 we put away just 5.5 per cent of disposable income, down from 6.8 per cent in the previous three months. The figure has more than halved in the past decade. Ten years ago, before savings rates hit rock-bottom, it stood at 12.9 per cent.
The Government-sponsored Money and Pensions Service hopes to persuade millions more people who struggle to save to put money aside on a regular basis.
With its latest Agenda for Change: Nation of Savers, it wants them to build up a cash reserve for short-term emergencies.
It is in talks with banks, building societies and credit unions about how best to do this — but says it is crucial products are simple and easy-to-understand. One idea is ‘automated savings’, where money is taken directly from your salary. Then you won’t miss it. It hopes to have schemes in place next year.
Trade body, the Building Societies Association (BSA), also says it aims to target one million savers through its Savings Taskforce scheme in the next five years.
Mike Regnier, chairman of Savings Taskforce and chief executive of Yorkshire Building Society, says: ‘We know that a buffer of savings for emergencies can help households deal with events that might otherwise put them into financial difficulty. We will look to work with employers across the country.’
The building society has already set up a regular savings plan for its own employees and works with 100 other companies.
Last year, it signed up 135,000 people to start saving through workplace schemes. Savers can choose how much to put away each month. The cash goes into an easy-access account with Yorkshire BS paying 0.75 pc.
Other members of the Taskforce include Coventry, Principality, Beverley, Hinckley & Rugby, Mansfield and Nationwide building societies along with Capital Credit Union.
Other options are schemes where regular monthly savings from your salary are split between an emergency pot and your pension. Shoe repairers Timpson was the first firm to offer this so-called"sidecar" arrangement to its 5,600 employees last year.
The Government launched its own Help to Save plan in September 2018, which doubles savers’ money. The maximum saving is £50 a month. The scheme is open to some claimants of Working Tax Credit and Universal Credit through the gov.uk website.