New Program Aims To Make 11.5 Million Britons Regular Savers By 2030
22 Jan 2020
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- The program, being launched by Money and Pensions Service (MaPS), aims to improve the financial well-being of millions in the country.
- The program includes an increased focus on school financial literacy programs and greater access to financial advisory services.
- Additional funding for the program is expected to come from partners such as banks, corporations, and schools.
A financial well-being program has been designed by the government, which promises to bring millions of Britons out of credit card debt and actually convert them into savers by the end of this decade.
The recommendations have come as a result of shocking statistics revealed by a government agency called the Money and Pensions Service (MaPS) while delivering a summary of household finances being maintained by the British people. According to the reported figures, an estimated 11.5 million British people hold total savings of under £100. Also, 9 million people reportedly are relying on expensive credit card debt or payday loans to pay for weekly essentials, such as food and bills.
To help people get out of crippling debt obligations and convert them into savers, MaPS has recommended a 10-year long plan which promises to enable two million people to save regularly and get two million more to avoid spending through a credit card, at least with respect to daily expenditure.
The plan includes an increased focus on delivering valuable financial education in schools. Currently, the financial education program covers only 4.8 million pupils. The program plans to extend this number to 6.8 million pupils. Also, the number of people who have access to debt advice would be increased by 300,000 as well.
However, the plan would not be getting as much additional funding from the government as required. Instead, MaPS must rely on funding from banking partners, companies, and even schools to help cover funding deficiencies of the program.
According to Guy Opperman, who is the Pensions Minister, it is part of the government’s key objectives to enable greater financial literacy among its population so that they are able to make rational financial decisions on their own. Opperman highlighted that MaPS offers the public complete information as well as guidance, and this is helping the government achieve a core objective.
However, Opperman believes that the challenges lying on the way forward for MaPS would be very similar to those experienced by the Money Advice Service back in 2012. MAS had come up with a similar program, aiming to advise 11 million Britons every year regarding financial decisions as well as enabling a million to make good financial choices on their own.
Unfortunately, in 2016, MAS had been abolished by the government, which cited a waste of resources as the core justification behind the decision. The government found little benefit arising out of the MAS program considering it spent around £80 million for the purpose of advertising. MAS was later merged with the Pensions Advisory Service and Pension Wise and the resultant agency came to be known as MaPS.
But, with the help of existing partners, like the banking sector through UK Finance, and new partners including companies and schools, Sarah Porretta, who works as MaPS’ director of strategy, believes that the 2030 plan might be possible to deliver.
According to Porretta, a company called Timpson is already implementing a program that can be scaled across all companies operating in the UK. The program, called sidecar savings, allows Timpson to deduct a specific amount from each employee’s paycheck every month. A portion of this deduction is deposited into an emergency savings account which can be accessed at any time by the worker, while the rest is deposited in the pension pot. A threshold has been set on the emergency account and, once crossed, the funds are automatically transferred into the pension fund of the employee. This program is administered by Nest, the employer pension provider set up by the government.
The rentflex system might also be extended as part of the 2030 plan as a step to reduce reliance on credit cards and payday loans to make essential regular payments.