What is UK Savings Week?

An annual BSA-led campaign focused on the benefits of saving and building positive savings habits. UK Savings Week (UKSW) 2024 will run from 9 – 15 September.

The BSA launched UKSW in 2022 in the midst of a cost-of-living crisis, when people had to pay attention to their finances more than ever before. The campaign has grown year on year and partners with a large variety of organisations to spread the message. In 2023, over 300 organisations supported the campaign.

What does the campaign seek to achieve?

To get everyone talking about the benefits of saving. UKSW can help people in different ways depending on their individual circumstances:

• For those with no savings – to achieve financial resilience by building an emergency savings buffer.

                     GOAL: to help 2 million more people become regular savers by 2030.

• For those with savings already – to make the most of their pot and help it last longer.

                     GOAL: to help people shop around and reduce 0% balances by £50 billion.

What more could the government do to encourage a nation of savers?

1. Introduce workplace savings schemes

There are clear links between establishing good savings habits, financial resilience and wellbeing – with research making a connection between financial resilience, wellbeing and workplace productivity.

There is a real potential to meet individual, corporate and national interests through offering workplace savings schemes. Workplace savings work by diverting a proportion of a person’s salary into a specific savings vehicle each month. The Government should help to open up this market by reducing existing regulatory barriers to opt-out schemes and exploring requirements for employers with over 250 employees to offer workplace savings schemes through payroll deduction.

Workplace savings schemes can support people to further their financial resilience and create a stronger savings buffer. They also offer an opportunity for industry to attract new savings members.

2. Increase the Personal Savings Allowance

The Personal Savings Allowance (PSA) was introduced when the Bank Rate was 0.5% and a basic-rate taxpayer could have around £75,000 in tax-free savings due to the PSA, based on the best instant-access rates at the time. Since then, there have been 14 rises in the Bank Rate, which now stands at 5.25%, and savings rates have increased in a similar way.  

Based on savings rates available currently, a basic-rate taxpayer will reach the PSA threshold with savings balances of around £20,000. The PSA should reflect the changes to the Bank Rate, so the value of the tax-free savings remains in line with its original intentions.

3. Reduce the Lifetime ISA withdrawal penalty on a permanent basis

Based on the current scheme rules, in order to receive the Lifetime ISA (LISA) bonus, account holders must purchase a property priced within the threshold of £450,000. If the property costs more, they must pay a penalty payment of 25% of the total savings pot. This means they not only lose all of the Government bonus, but a chunk of their own savings too. 

For example: If somebody uses their LISA to save £4,000 per year for five years, they are forced to sacrifice the Government bonus of £5,000 and use an additional £1,250 of their own savings if they wish to use these savings for:

• a house purchase of more than £450,000; or
• anything else – a necessity for many due to the rising cost of living.

Reducing the LISA penalty withdrawal fee from 25% to 20% would allow savers to retain all of their own savings, whilst forfeiting the Government bonus if they buy a property above the scheme threshold or if they need to access their savings for another reason. This change was introduced on a temporary basis during the COVID-19 pandemic (6 March 2020 – 5 April 2021) and provided much needed support to consumers in difficult times. Reintroducing this on a permanent basis would retain the spirit of these savings schemes and encourage young people to start saving to buy their first home.

4. Increase and equalise LISA and Help-to-Buy ISA thresholds and review these annually

LISA and Help-to-Buy (HTB) ISA property price thresholds are different. For first-time buyers saving in a HTB ISA, the threshold is £450,000 inside London but £250,000 outside of London. For LISA account holders, the threshold is £450,000 regardless of the location of the property. This is not only confusing; it is also unfair for those subjected to much lower thresholds than others in the schemes.

Despite a 30% increase in house prices since LISAs were introduced, the thresholds for both schemes have remained unchanged. This has prevented many first-time buyers from buying a house within these limits. Increasing the thresholds for both schemes to £550,000 and removing the inside vs outside London disparity for the HTB ISA would make both schemes fairer and accessible. Reviewing the thresholds every year would also ensure both schemes remain relevant for first-time buyers.

If you would like to get involved or find out more, please contact us at uksavingsweek@bsa.org.uk. 

Watch the UK Savings Week video here.