The purpose of the Bill is to: provide a financial incentive to saving among the poorest in society.
The main elements of the Bill are:
• establishing a Saving Gateway accounts scheme, as announced in Budget 2008, and give HM Revenue and Customs the necessary powers to administer it, including to approve providers of the scheme and provide for penalties in cases of fraud and maladministration;
• permitting financial institutions to offer and operate Saving Gateway accounts and set out the duties of financial institutions in relation to the scheme;
• allow the Government to define who will be eligible to apply for accounts, and enable it to pay out matched funding to savers on account maturation.
The main benefits of the Bill are:
• offering a national cash saving scheme for those on lower incomes, providing a financial incentive to save through matching (a government contribution for every pound saved);
• the scheme will be open to individuals in receipt of qualifying benefits and tax credits namely: Working Tax Credits; Child Tax Credits paid at the maximum rate; Income Support; Jobseeker’s Allowance; Incapacity Benefit and Employment and Support Allowance; and Severe Disablement Allowance – around 8 million individuals in the UK;
• the scheme will open in 2010, with the first matched payments paid out to savers from 2012;
• in pilots carried out between 2001 and 2007, over 22,000 people took part, achieving over £15 million in savings;
• the scheme aims to kick-start a saving habit among people on lower incomes, enabling them to plan for the future and cope with financial pressure, and to promote financial inclusion by encouraging people to engage with financial institutions such as banks, building societies and credit unions.
