Rotating Savings and Credit Associations

Rotating Savings and Credit Associations are collective schemes which allow friends to save together and have been popular in the Caribbean for many years. Often called pardner, pardna or paadna schemes, they are not regulated in the way banks and formal lenders are, but those who use them say they encourage savings and allow people without bank accounts access to credit.

Pardner schemes – saving among friends

The pardner, which also means partner, may not be a well-known UK custom but among the Caribbean community it's a popular method of saving that does not involve banks.

A pardner is basically a partnership among people to save collectively. Many claim it is a good savings discipline and lets people who can only save fairly small amounts get into the savings habit.

How do they work?

Pardners and bond committees are known as Rotating Savings and Credit Associations, or ROSCAs.

  • A group of people – friends, family or workers – deposit regular sums of money over a fixed interval with a principal individual, known as ‘the banker'.
  • The money then goes into a central fund.
  • Each person in the group will take a turn in withdrawing all that money.
  • For example, if ten pardners pay in £10 each week, over the next ten weeks each week the banker will pay £100 (the draw) to one pardner.
  • This is done each week until every pardner member has taken part in a draw.

What you need to know about Pardner schemes

They can be risky

Pardner schemes are not regulated and so the money you’ve saved is not covered by the Financial Services Compensation Scheme, which protects bank, building society and credit union savings of up to £85,000 per person. There have been cases where these schemes haven’t paid out or where the savers have lost money. Even if you trust the banker and the other partners you could still lose out.

They pay no interest

No interest is offered, unlike regulated banks and savings providers. That means your money will lose value in real terms (because of the effects of inflation).

You have limited access to your money

Money can be tied up for months in some schemes, depending on how many members it has and how it operates.