People would be more likely to save if they were in with the chance of a prize.
A radical suggestion has been put forward to tackle the savings crisis, and get us all putting more money away. Debt charity StepChange believes a way to encourage people to save would be to offer prizes.
Research by the charity has revealed that a mammoth 21.8 million people are not confident that they are saving enough to cope with a rainy day. Those same people are also not convinced they are going to be able to start saving either.
Adapting auto-enrolment pensions
One way to counter this would be to adapt the auto-enrolment pension savings scheme. This is currently being rolled out to make sure everyone is saving for a pension via their employer. For more read Workplace pensions: what it means for you.
StepChange believes the scheme should include an accessible savings fund within a pension pot, so people are saving through their earnings without really realising it.
Earlier research by the charity found that if people had a £1,000 'rainy day fund', it would protect half a million households from debt problems. But more than 7 million households have nowhere near that amount set aside.
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Save and win a prize!
[SPOTLIGHT]StepChange also said it would like to see a prize fund introduced to the auto enrolment scheme.
“Using prizes can incentivise people not to opt-out and not use the funds for anything but the emergencies for which the savings are intended,” says Edward Ware of StepChange. “We’ve suggested a possible scheme whereby those who reach £750 become eligible for a prize of £50,000 and those who reach £1,000 would become eligible for a prize of £100,000.”
The prize fund would be paid “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.”
Building a 'rainy day fund'
Whether there is the chance of a prize or not, it's a really good idea to have some savings built up in case of an emergency. For a comprehensive look at how to put together a decent savings pot, read How to build up your savings.
And if you already have some savings set aside, but want to get the best possible return, be sure to check out Where to earn most interest on your cash.
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