Incentives to save: Encouraging saving among low-income households

Evaluation of the Saving Gateway pilot scheme

Authors: Professor Elaine Kempson, Stephen McKay, Sharon Collard
Funded by: HM Treasury
Published by: HM Treasury
Publication date: March 2005

Government efforts to encourage saving and asset-accumulation have led to a range of policy initiatives, including the concept of matched funding as a means of encouraging a 'strong saving habit'. The Saving Gateway is a cash saving account for working age people on lower incomes. The scheme is similar in design to Individual Development Accounts, which were developed in the United States and are locally-run initiatives where people's savings are matched by local and national funds from both public and private sources.

The first Saving Gateway pilot was carried out in five areas of England. In four areas it was run alongside the Community Finance and Learning Initiative, a Department for Education and Skills pilot aiming to bring together services relating to financial literacy, micro-enterprise and adult learning. In these areas separate local bodies 'recruited' people to open accounts and also provided training or education on financial matters. In the fifth area eligible people were notified by letter from central Government, and invited to open accounts at a local branch. The Halifax Bank was the provider of Saving Gateway accounts for all participants for the duration of the pilot.

PFRC, in partnership with ECOTEC Research and Consulting, was commissioned to evaluate the Saving Gateway pilot scheme. The overall aim of the evaluation was to gain practical understanding of the operation of a savings account for lower income groups. It had a number of key strands:

• A self-completion questionnaire that was completed by everyone opening a Saving Gateway account.
• The monitoring of transactions made on each Saving Gateway account to examine all flows into and out of the accounts.
• A face-to-face interview survey with account-holders, and also with a comparison or control group. These respondents were followed-up by telephone around a year after the first interview.
• Depth interviews with account-holders.
• Self-completion questionnaires on account maturity.

The evaluation was carried out over three years and was completed in early 2005.

Incentives to save: encouraging saving among low-income households (PDF, 956kB)