News that the Savings Gateway (SG) is to be piloted first before it goes nationwide has been welcome...
News that the Savings Gateway (SG) is to be piloted first before it goes nationwide has been welcomed by the National Consumer Council as testing should ensure it hits the target market before it is rolled out.
Plans for the SG were announced in a Treasury consultation document unveiled in November 2001 but at the time gave little indication of how the scheme would work, and what the terms of the product would be.
Gordon Brown yesterday revealed the pilot project will run for 2 ½ years in Gorton (South-East Manchester), Tower Hamlets, East London, Cumbria and Cambridgeshire from August.
Brown also revealed that Halifax would be the sole provider of SG plans during the pilot, which encourages the low-paid to save upt o £25 per month by matching every £1, up to a value of £1,000 over five years.
Anna Bradley, NCC director, has welcomed the decision to test the scheme first rather than unveiling a savings system which may not work for the low-earner, and at the same time suggests financial advice will have to play a key role in the future savings plans once low-earner plans are underway.
"If the saving gateway is to succeed in its admirable objectives, it must be tailored to the needs of those on low incomes and flexible enough to allow target savers to benefit fully from the incentives on offer.
"Translating what is a great idea into a workable scheme that hits its target is a major challenge for the pilots announced. That challenge can only be met if the views and experiences of the pilot participants are the overriding influence on the final shape of the saving gateway.
Bradley continues: "It is important too, that the gateway does not distort consumer decisions about their finances - for instance by encouraging them to go deeper into debt to take advantage of the matching funds.
And that means independent advice will need to be available for individual savers before they sign up, to help them decide if now is indeed the right time to seize this one-off savings opportunity. Guidance on what to do with the nest-egg at the end of the scheme, will also be needed."
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