Employee participation in workplace saving increased “dramatically” during trials of an opt-out payroll savings scheme from Nest Insight.
Researchers from the research and innovation centre ran the first major multi-year pilots with UK employers including Bupa, Co-op and SUEZ UK.
The researchers said the results demonstrate the powerful potential for opt-out saving schemes to make a difference to the financial security of employees.
Traditionally workforces have been offered savings schemes that they need to actively opt-into. Nest Insight wanted to see whether automatically offering instant-access savings accounts to workers could help people save, particularly people who have faced barriers to saving previously.
Employees were enrolled into the trial scheme, but could choose whether or not to save and could opt-out of it in one step.
For those that did choose to save, everything was done automatically for them. It is a concept similar to automatic pension enrolment, where the money comes straight out via payroll. However, a major difference is that pensions auto-enrolment of employees is legally required.
Nest Insight said the results show that the huge potential of workplace payroll savings schemes can only be fully realised if an opt-out approach is taken.
“We’ve heard over and again from new savers of the big impacts this small change has had in their lives,” said Jo Phillips, director of research and innovation at Nest Insight on social media.
“Greater resilience, control, peace of mind, confidence… We’ve learned that this approach is popular and inclusive, reaching people who haven’t saved before or who have struggled to do so previously.”
Nest Insight said that when it comes to saving, the UK lags behind other comparable countries. Its research shows that a quarter of UK adults have less than £100 in savings and half would struggle to pay an unexpected £300 bill.
Emma Reynolds, economic secretary to the Treasury, said: “Delivering security for working people is at the heart of our Plan for Change.
“We want to build financial resilience across the country so that people have something to fall back on for emergencies, such as a broken boiler, and I welcome Nest Insight’s thoughtful contribution to this work.”
Claire Costello, chief people and inclusion officer for the Co-op, said: “Our colleagues told us they needed help to start saving, especially for the unexpected, and autosave has proven to be a simple but powerful way to offer that support. We’ve seen the difference it makes in helping people feel secure, confident, and in control of their finances. I’d encourage other employers to consider how this type of support could work for them too – together, we can make a positive, long-term impact on financial resilience and wellbeing.
“By making colleague financial wellbeing a core priority, we’re also taking action on social mobility, a crucial ambition for Co-op and one that’s central to our vision. As employers, we have a vital role to play in creating a workplace that empowers growth, and I’m delighted that through this partnership with Nest Insight the Co-op has been able to lead in this space.”
Sarah Melvin, head of UK and Europe, and chair of Africa at BlackRock, said: “These findings highlight a powerful way of addressing the UK’s savings gap through an evidence-based opt-out approach to workplace savings that is popular with both employers and employees. The trials demonstrate the transformational impact that accessible emergency savings solutions can have on strengthening household financial resilience.”
The results of the trial have been published in a report from the research centre titled ‘Easier to save’.
