Help to Save - Regular Savings Account to Pay 25% Interest per Year for FOUR Years!

Personal_Finance / UK Tax & Budget Mar 15, 2016 - 02:34 AM GMT

Last year the conservative led government bribed the grey vote in the run up to the UK general election by way of their Pensioner Bonds that paid a high 4% interest fixed for 3 years for the over 65's, near double the market rate of the time. We'll with the about to be announced 'Help to Save' scheme then soon it will be the turn of the low paid to reap a minimum return of 25% per annum for 4 years on regular savings of £50 per month!

The specifications are for upto £50 per month to be saved in an account where after 2 years on top of any interest earned the UK government will top up the account with a 50% bonus that in simple terms amounts to an effective minimum interest rate of 25% per annum!

So based on saving the maximum of £50 per month that after 2 years would total £1200 would receive a 50% bonus of £600! And again £600 2 years later. Therefore interest of 25% per year for four years for savings of £50 per month. And remember this follows the abolishment of the 20% tax on the 1st £1k of interest earned (as of 6th April 2016) aimed at average to higher paid workers, though at current interest rates one would need about £45k in savings to earn that £1k of tax free interest. AND then there is the 'Help to Buy' scheme for first time home buyers. What's next ? 'Help to Holiday in Europe so vote REMAIN' ?

Now before you all start salivating at such high potential returns on savings accounts not seen since the likes of out of control inflation of the 1970's. There is the tight legibility criteria, for the savings accounts will be aimed at those on the lowest pay, specifically for only those in receipt of the work benefits of Universal Credit or Working Tax Credit. Also note that implementation will be some 2 years away!

The objective being that low paid savers would build up an emergency fund so as to better cope with proposed and future benefits cuts of an estimated £2 billion per annum which is set against the savings account proposal likely cost no more than £70 million, so unlikely to be utilised by even 10% of the estimated 3.5 million people who could benefit from this cash handout.

In the grand scheme of things this is just another 'small' manifestation of quantitative easing aka money printing of the central bank showering crisply printed bank notes down on the economy, and in money terms not even 0.001% of the amount the Bank of England stuffed into its bankster brethren's coffers.

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By Nadeem Walayat

http://www.marketoracle.co.uk

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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