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Helping members to save for their future

Saving money is one of the best financial habits our members can adopt. It helps to:

  • create a buffer against unforeseen financial emergencies
  • pay for large purchases
  • avoid debt and reduce financial stress
  • create a financial legacy
  • provide a greater sense of financial freedom.

Here are some great examples of how we have used member research and insight to enhance our savings propositions.

Start to Save

Across the UK, around 45% of the population are classed as financially squeezed and struggling. The Money and Pensions Service aims to get 2 million of these people saving by 2030. We have pledged to support this goal by helping 200,000 people classed as squeezed and struggling to start saving by 2025.

As part of our strategy, we launched Start to Save in February 2020, open to member applications until October 2021. The aim was to encourage and reward good savings habits. This product was created to help struggling and squeezed members to create a financial buffer to help manage unexpected costs.

Start to Save had a competitive interest rate of 1.25%, gave members instant access to their money and rewarded regular savers with the chance to win £100 across 7 prize draws. As a result, we’ve helped over 150,000 members who didn’t have savings to save at least £100 and over 13,500 members won £100 each in the prize draws.

ISA Season 2021

‘ISA Season’ is a key time for the savings market, with members presented with a suite of options for tax-free savings.

To promote the benefits of this saving option, and to reward existing members, in March 2021 we launched a Member Exclusive Fixed Rate ISA, offering a competitive rate plus a cashback incentive of £50 to members who transferred £10,000 or more to ISA funds, from an external provider.

This product was popular with members before its withdrawal in April 2021, with over 20,000 members eligible for the cashback payment, equating to £1 million.

Impulse Saver and Round-ups

As people use digital payments more and cash less, the ‘change jar’ that many of us relied on to raid in emergencies is disappearing. Squirrelling away loose change can be a simple way to build up savings over time. Our ‘Impulse Saver’ and ‘Round-ups’ are digital versions of this. Members can sign up in the mobile app and quickly transfer money from a Nationwide current account to a savings account as well as round up the pennies from their spending activity.


The importance of banking to support younger age groups

There is a lot of value in learning to manage money from a young age, which is why we have designed accounts to suit the specific needs of younger members from secondary school through to university.

FlexOne

Our FlexOne youth current account is available to members aged 11 to 17. It’s designed to offer an account to our youngest members, whether this is their first bank account and they want somewhere to pay their pocket money into, or they are receiving wages from their first part-time job.

FlexOne gives our youngest members a safe space to get their first experience of using a current account. By offering an account with no fees and charges and no overdraft, blocking gambling transactions and offering the option of a cash card or Visa debit card, we can give both children and parents peace of mind that they’re protected from going overdrawn or making undesirable transactions. The Visa debit card can be used while abroad completely fee-free, perfect for first holidays or school trips. From April 2021 to March 2022, we saw 68,303 FlexOne account holders use their card abroad each month.

Offering interest on credit balances up to £1,000 allows our young members to gain experience in saving their money and being rewarded with a return on their investment. To support the development of financial management skills, the account can be managed using our Banking app, Internet Bank and by registering for text alerts. With 99% of FlexOne members registered for online banking and 81% registered and active for mobile banking, our young members are becoming more engaged in their money by easily checking their balance and transactions.

FlexStudent

Money can be tight at university, which is why the FlexStudent arranged overdraft is designed to grow with members during their studies. 

Students registered on a UCAS course will be offered a guaranteed interest-free £1,000 overdraft in their first year of study, increasing to £2,000 in year two and £3,000 in their third year. We know that not everyone will need this amount. So, to support making borrowing manageable for students and to prevent them from being put in a difficult financial position, we only increase the limit if the member asks us to.

To support members with managing their account, they can use our Banking app, internet banking and register for text alerts.  We don’t charge students any fees or charges for using the account.

After students graduate, they can continue holding their fee-free overdraft for up to three years.  We appreciate that paying back an overdraft can take time, so we support our members to stay on top of their finances by slowly dropping the overdraft limit each year.

Banking overseas can be expensive, especially for student travel as gap years and semesters abroad can be longer than an average holiday. Therefore, account holders studying abroad or going on holidays benefit from completely fee-free foreign usage on the account.

All students are given a contactless Visa debit card and can make use of Apple Pay, Google Pay and Samsung Pay, allowing them easy access to their funds.


Our role for members in later life

Half of today’s 60 year olds are expected to live to 90 (Gratton and Scott (2017): The 100 Year life), and most children born today can expect to live past 100. But life expectancy has risen more quickly than healthy life expectancy – people at 65 can expect to live just half of the remainder of their life without disability. And even though 97% of people say they don’t want to go into a care home (Better At Home 2019 - A Live In Care Hub Report About Elderly Care (opens in a new window)), 15% of over-85s do end up spending later months or years in a care home, at an average cost of £39,000 per year (figures taken from Carehome costs and fees (opens in a new window)).  

The traditional stages of education, then work, then retirement are becoming blurred

A 50% reduction in active defined pension benefits from 2012 to 2020, and the introduction of pension freedoms, have gone some way to help create a more flexible and fluid later life and retirement. Retirement is now a slower transition as people choose to keep working, reduce hours or take a break, then return to work later. The gift of longer life creates space for a balance between relaxing and investing in skills and relationships.

Wealth is being transferred down the generations

A third of people looking to buy in the next five years are planning on getting financial help from family or friends (information taken from Bank of Mum and Dad to drive UK housing market recovery after COVID-19, says Legal & General (opens in a new window)) . However, on average, inheritance is not typically received until the age of 61 (information taken from Resolution Foundation IC report - PDF, 494KB opens in a new window)).

Key areas where we can support our members in later life

Helping members enjoy life

Members told us:

  • ‘I don’t want to stop’.
  • ‘I want to enjoy new experiences’.
  • ‘I want to be part of my community’.

Helping members make the most of their home

Members told us:

  • ‘I want to stay in my own home’.
  • ‘I want my home to work for me’.
  • ‘I want to make money from my home’.

Helping members make the most of their money

Members told us:

  • ‘I want my money to stretch’.
  • ‘I want my money to last’.
  • ‘I want to share my money with my family’.

Our response

As we live longer, we’ll need to give more attention to our tangible assets, such as our wealth. And to our intangible assets, such as family and friends, skills and knowledge, and health and vitality. Striking a balance between these will be ever more important for quality of life.  

We have started the journey of helping members meet these needs and manage their wellbeing by launching a range of lifetime and retirement mortgages for over 55s. And we plan to do more.   

Our ambition is to create confidence that the time our members spend in retirement will be as worthwhile as they would like it to be. 

By 2025 we are committed to helping 25,000 members use the money built up in their homes to live a better retirement. This is how we plan to do it. 

For many people, the start of retirement is an exciting new chapter, one they’ve worked, saved and prepared for. But sometimes, retirement might arrive earlier than expected or bring with it challenges that mean our members need to rethink their finances.

To help, our dedicated and specially trained Specialist Mortgage Advisers offer fee-free advice on our range of mortgages for over 55s. We host regular ‘Releasing equity with Nationwide’ webinars to help explain our borrowing options and answer any questions our members have on the subject. 

Lifetime mortgage

A Lifetime mortgage is a type of equity release that lets members unlock the value in their home as a tax-free lump sum of money. Monthly repayments are only made if the borrower chooses to, and loans are usually repaid when the last borrower moves into long-term care or passes away and the home is sold. This is particularly helpful when a member has experienced a shortfall in their pension. 

Members in later life find the release of equity useful for reasons such as:

  • clearing debts
  • helping a loved one buy their first property 
  • paying for home improvements
  • making a major purchase, such as a new car
  • taking the holiday of a lifetime.

Taking out an equity release mortgage means being able to do this without having to dip into a pension or move home. 

Retirement Interest Only mortgage

Our Retirement Interest Only mortgage is very similar to a standard interest only mortgage, but with some differences. Unlike regular interest only mortgages, this mortgage doesn’t have a fixed end date to repay the balance. The main part of the loan (capital) is usually only paid off when the last borrower moves into long term care or passes away.   

Retirement Capital and Interest mortgage

Much like a standard repayment mortgage, you pay back both interest and capital on a monthly basis.

This mortgage offers members the ability to borrow up to a higher age than on a standard mortgage. Unlike our Retirement Interest Only and Lifetime mortgage, this product is still designed to repay your mortgage in full by the end of your term. This gives our members a full range of options for accessing and repaying mortgage-related funds. 



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