Overview

The Saving Gateway Accounts Act 2009 established a savings scheme for low-income individuals receiving certain benefits or tax credits. The scheme provides a government bonus upon reaching a maturity period, encouraging saving habits.

Description

This Act created "Saving Gateway Accounts" designed to encourage saving among low-income individuals. Eligibility is based on receiving specific benefits (income support, employment and support allowance, jobseeker's allowance, incapacity benefit, severe disablement allowance, carer's allowance, child tax credit, and working tax credit) and having a UK connection. Eligible individuals receive a notice of eligibility, allowing them to open an account with an approved provider within a specified timeframe.

Accounts have a minimum 12-month maturity period. At the end of this period, the account holder receives a maturity payment calculated by multiplying the highest balance reached by a government-set bonus rate. If the account holder dies before maturity, a death payment is made to their representatives. Regulations govern account operation, including limits on monthly contributions, statement requirements, and the circumstances under which accounts cease to be Saving Gateway accounts. The act also details regulations concerning the reporting of information to HMRC, the recovery of payments by HMRC, penalties for non-compliance, appeal procedures, and an independent review of the scheme's effectiveness.

Government Spending

The Act leads to government expenditure through the maturity and death payments made to account holders. The exact cost depends on the number of individuals participating and the amounts saved. No specific figures are provided in the Act itself.

Groups Affected

• Low-income individuals: Those eligible for specified benefits or tax credits can benefit from the government bonus, encouraging saving.
• Financial institutions: Approved account providers manage the accounts and receive government payments.
• HMRC: Responsible for overseeing the scheme, issuing notices of eligibility, collecting data, and recovering payments if necessary.
• Government: Bears the financial burden of the bonus payments.

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