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Wed, 20 January 2021

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The path to financial empowerment starts with financial inclusion

The path to financial empowerment starts with financial inclusion

Credit: PA Images

2 min read

As Minister for Pensions and Financial Inclusion, I want people right across the country to be able to tap into, and seize the benefits, of greater financial access.

First-hand experience has shown me that families, individuals and wider communities all benefit from greater financial security and wellbeing when progress is made on expanding access to financial services.  

It creates opportunities for planning – not just for long-term goals, such as home ownership, but also for dealing with those unforeseen emergencies that often make the difference between “just about managing” and being faced with spiralling debts.

More broadly, accessible finance and credit can help reduce the “poverty premium” - the extra costs that families in poverty pay to access essential goods and services – and decrease the necessity of taking risky, high-interest loans.

As Minister for Pensions and Financial Inclusion, I want people right across the country to be able to tap into, and seize the benefits, of greater financial access.

Greater financial inclusion can also have a positive impact on people’s financial capabilities, meaning they are better able to make informed choices about their current finances, and plan for their financial future.

To take just one example, automatic enrolment has transformed the way millions of people save for retirement, bringing many into pension saving for the very first time. Pension participation among eligible women working in the private sector rose from just 40% in 2012, to 86% in 2019.

Elsewhere, research into “sidecar” savings is being undertaken, which combines an accessible emergency savings account with traditional retirement savings, such as a workplace pension.

The challenges of this year have brought short-term emergency savings to the forefront, and I am very supportive of the sidecar savings concept, and the trialling activity being undertaken. As well as other aspects, the trials are looking into the impact of sidecar savings on workers’ financial resilience and wellbeing.

Greater financial inclusion can also have a positive impact on people’s financial capabilities, meaning they are better able to make informed choices about their current finances, and plan for their financial future.

We know that the first step to better financial wellbeing is often talking about money.

I encourage anyone concerned about their finances, or simply just seeking to better understand the options out there, to take advantage of the free, impartial guidance available from the Money and Pensions Service.

I am optimistic about what more Government can achieve as we work with the financial services industry, and people right across the country.

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Inclusive Capitalism

The next decade holds big challenges and it rarely has it been so important to show that capitalism and social progress aren’t opposing forces. Quite the opposite. All it takes is a longer-term view, a more inclusive attitude and for everyone to take that first step.

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