This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.theguardian.com/society/2019/may/14/rainy-day-protect-people-debt-poverty-uk-us

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
The UK needs its own rainy day bill, to protect people from debt The UK needs its own rainy day bill, to protect people from debt
(5 months later)
The degree to which people are struggling to get by – including having no savings to deal with an unforeseen bill – should be seen as a crisis. Some estimates suggest that the number of people with even £100 in savings has fallen in recent years while others say one in five people have no savings at all to fall back on and about 15 million people have no pension savings. Last year, Britain’s household debt had reached a new peak, with an average of £15,385 owed across a range of lenders. About 8 million people are struggling with some form of problem debt (paywall). And, a key safety valve for the poorest households, emergency funds from councils have all but disappeared in many parts of England. No wonder then that it can take very little for someone to be plunged into poverty and needing to turn to food banks.The degree to which people are struggling to get by – including having no savings to deal with an unforeseen bill – should be seen as a crisis. Some estimates suggest that the number of people with even £100 in savings has fallen in recent years while others say one in five people have no savings at all to fall back on and about 15 million people have no pension savings. Last year, Britain’s household debt had reached a new peak, with an average of £15,385 owed across a range of lenders. About 8 million people are struggling with some form of problem debt (paywall). And, a key safety valve for the poorest households, emergency funds from councils have all but disappeared in many parts of England. No wonder then that it can take very little for someone to be plunged into poverty and needing to turn to food banks.
Food bank network hands out record 1.6m food parcels in a yearFood bank network hands out record 1.6m food parcels in a year
In the US, where the term “safety net” is bordering on oxymoronic, the proportion of households lacking the capacity to withstand a single, small financial shock has become something of a rallying cry for anti-poverty advocates. Some 40% of American adults say they don’t have even $400 (£307) in spare cash to cover an unexpected expense. A quarter of the adult population have no retirement or pensions savings.In the US, where the term “safety net” is bordering on oxymoronic, the proportion of households lacking the capacity to withstand a single, small financial shock has become something of a rallying cry for anti-poverty advocates. Some 40% of American adults say they don’t have even $400 (£307) in spare cash to cover an unexpected expense. A quarter of the adult population have no retirement or pensions savings.
Research shows that once debt becomes a problem for people on low or fixed incomes, it can render them stuck in a cycle of poverty, having to pay off high interest loans but finding themselves unable to put money aside to escape the cycle.Research shows that once debt becomes a problem for people on low or fixed incomes, it can render them stuck in a cycle of poverty, having to pay off high interest loans but finding themselves unable to put money aside to escape the cycle.
Prosperity Now (PN), an anti-poverty organisation, produces an annual scorecard that looks at a variety of measures of economic wellbeing, including savings. Its 2019 analysis highlights that two-fifths of US households are “liquid asset poor” – that is “they lack the savings to weather a financial shock”.Prosperity Now (PN), an anti-poverty organisation, produces an annual scorecard that looks at a variety of measures of economic wellbeing, including savings. Its 2019 analysis highlights that two-fifths of US households are “liquid asset poor” – that is “they lack the savings to weather a financial shock”.
Andrea Levere, PN’s president, says that while there are a variety of tools in different states to help lower-to-moderate income households save money, these are fragmented, often ineffective and don’t address the wider issues of low pay and job insecurity. With the introduction last month of a new bill to Congress however, there are signs that at least some in Washington DC have been paying attention.Andrea Levere, PN’s president, says that while there are a variety of tools in different states to help lower-to-moderate income households save money, these are fragmented, often ineffective and don’t address the wider issues of low pay and job insecurity. With the introduction last month of a new bill to Congress however, there are signs that at least some in Washington DC have been paying attention.
Young people’s mental health is a ‘worsening crisis’. Action is needed | Mary O’HaraYoung people’s mental health is a ‘worsening crisis’. Action is needed | Mary O’Hara
If passed, the Saving for the Future Act could be a “game changer”, according to Levere. It would create new options for retirement savings for employees, with tax relief for employers to offset some of their minimum contributions. But, interestingly, it would also create an emergency savings account that people could access to help respond to unforeseen financial challenges, say if a member of the household became suddenly unemployed. In addition there is the bipartisan “rainy day” bill, introduced by Democratic presidential hopeful Cory Booker along with a number of Republican co-sponsors. This would enable taxpayers to defer a portion of their annual tax refund (Americans commonly rely on tax refunds accrued over the course of a year and paid out at the end of the tax year) and opt into a programme where the deferred money would earn some interest and could, if needed, be accessed before annual tax refund time to deal with emergencies.If passed, the Saving for the Future Act could be a “game changer”, according to Levere. It would create new options for retirement savings for employees, with tax relief for employers to offset some of their minimum contributions. But, interestingly, it would also create an emergency savings account that people could access to help respond to unforeseen financial challenges, say if a member of the household became suddenly unemployed. In addition there is the bipartisan “rainy day” bill, introduced by Democratic presidential hopeful Cory Booker along with a number of Republican co-sponsors. This would enable taxpayers to defer a portion of their annual tax refund (Americans commonly rely on tax refunds accrued over the course of a year and paid out at the end of the tax year) and opt into a programme where the deferred money would earn some interest and could, if needed, be accessed before annual tax refund time to deal with emergencies.
It’s all too common for people to wind up in poverty or in problem debt due to unexpected changes in circumstances. Finding fresh ways to protect people isn’t just desirable, it’s imperative.It’s all too common for people to wind up in poverty or in problem debt due to unexpected changes in circumstances. Finding fresh ways to protect people isn’t just desirable, it’s imperative.
• Mary O’Hara is the author of Austerity Bites• Mary O’Hara is the author of Austerity Bites
PovertyPoverty
Mary O'Hara: Lesson from America Lesson from America
Social exclusionSocial exclusion
Borrowing & debtBorrowing & debt
commentcomment
Share on FacebookShare on Facebook
Share on TwitterShare on Twitter
Share via EmailShare via Email
Share on LinkedInShare on LinkedIn
Share on PinterestShare on Pinterest
Share on WhatsAppShare on WhatsApp
Share on MessengerShare on Messenger
Reuse this contentReuse this content