StepChange calls for Premium Bond-style prizes for savers

Updated
StepChange calls for Premium Bond-style prizes for savers
StepChange calls for Premium Bond-style prizes for savers



A Premium Bond-style prize draw could incentivise people to set more money aside for financial emergencies, a debt charity has suggested.

StepChange said the draw could be introduced by reforming the current pension auto enrolment scheme, whereby money is automatically taken out of your salary each month and put towards retirement unless you actively opt out.

At present, those funds cannot be accessed until you're 55, a key problem for low income families in particular.

The scheme should therefore allow savers to access a small portion of these pension savings should they find themselves desperately short of cash at some point.

Each month, a part of their salary would be locked into the pension scheme, and another into the accessible savings account.

To motivate people to save more, the charity suggested offering monthly cash prizes once their savings pass a certain threshold. At £750, they would be entered into a draw for a £50,000 prize, while those with £1,000 could stand to win £100,000.

"The prizes could be paid for by taking a small proportion of the amount saved by each enrolled saver, or from the interest accrued, therefore meaning no additional cost to the Government or employer," it said.

The proposed system is similar to the Premium Bonds, which have proved massively popular with UK savers. The key differences in the Stepchange proposal is that people would be automatically enrolled, and that the odds of winning a prize will not improve once savers pass the £1,000 mark.

It believes doing so would avoid the odds being skewed in favour of wealthier savers.

Stepchange set the threshold at £1,000 as it believes this would provide many households with a a vital financial buffer. "Doing so would protect 500,000 households from falling into problem debt," a spokesperson said.



More on AOL Money:

Four charities investigated for cold calls​

New Foodbank app helps double donations​

Saudi prince to donate $32bn to charity

Student Loan Debt Precursor To More Overall Debt
Student Loan Debt Precursor To More Overall Debt

Advertisement