Trial to help workers build £1,000 emergency savings pots - MSE News 13 November 2018 at 12:52PM in Savings & investments 17 replies 1.8K views

Former_MSE_Naomi

A new initiative is being trialled to help workers build emergency savings for unexpected bills and events, in the same way they add to their pension pots...

Read the full story:
'Trial to help workers build £1,000 emergency savings pots'

Click reply below to discuss. If you haven’t already, join the forum to reply.

kwame41

A good idea in principle but people on low incomes wont do it. Lots wont even want to pay the 3% (rising to 5% next year) pension amount and will opt out.

Might work if it was a 'stand alone' scheme but even then very few people will go for it.

Difficult to save for a rainy day when it is always raining.

Alexland

I wouldn't want to rely on the Nest & Salary Finance administration processes to withdraw money in an emergency.

Alex

greenglide

Or, of course, they could just use a regular savings account?
It would pay more interest but without the gimmick.


Be interesting to see if it works though.

kidmugsy

Rationally I don't see how it beats saving in a Nationwide Flexclusive Regular Saver: 5% AER and as flexible as you could get.

Of course, the point is to cope with irrationality. Any high hopes will probably be dashed.

Glen_Clark

kidmugsy wrote: »

Rationally I don't see how it beats saving in a Nationwide Flexclusive Regular Saver: 5% AER and as flexible as you could get.

Of course, the point is to cope with irrationality. Any high hopes will probably be dashed.

Regular saver interest expires after a year.
I guess it depends on the tax treatment - which hasn't been explained.
It seems to be taken from pension contributions (taken from wages before tax) .
In which case whats to stop people just taking money out for supposed emergencies just to get it tax free.?
Sounds like it could get as hideously complicated as the rest of the tax system.

Glen_Clark

kwame41 wrote: »

Difficult to save for a rainy day when it is always raining.

Well that is the problem - (usually caused by high rents and low wages.)

short_butt_sweet

Glen_Clark wrote: »

I guess it depends on the tax treatment - which hasn't been explained.
It seems to be taken from pension contributions (taken from wages before tax) .

i doubt it. there would surely need to be legislation to grant any tax relief on money that isn't really going into a pension. i think it's just that NEST are involved in the admin.

IMHO, this might well help some people. it's "just" a psychological trick to get people to build up an emergency fund without trying. but a lot of personal finance is about psychology.

of course, many people also struggle to build up savings because their earnings are too low. higher wages for many people would also help. but it isn't either/or ...

[Deleted User]

What a lot of hassle to set up a fund for a small amount.

moneyfoolish

kwame41 wrote: »

A good idea in principle but people on low incomes wont do it. Lots wont even want to pay the 3% (rising to 5% next year) pension amount and will opt out.

Might work if it was a 'stand alone' scheme but even then very few people will go for it.

Difficult to save for a rainy day when it is always raining.

Many people on low incomes couldn't dream of being able to afford even putting money into a pension let alone saving anything.

Glen_Clark

BBH123 wrote: »

What a lot of hassle to set up a fund for a small amount.

Its not a small amount to someone who has got nothing and needs to buy essentials. https://www.bbc.co.uk/news/resources/idt-sh/How_debt_kills