Nest to trial ‘opt-out’ payroll savings
30 July 2021
The workplace pension scheme, Nest, is due to trial ‘opt-out’ payroll savings, which will help employees in saving up money that can be used in emergencies.
Nest’s research arm, Nest Insight, is due to establish whether building a savings fund that employees are required to actively opt-out of will encourage more people who want to save to actually do so.
Individuals who do not opt-out will begin to save a default amount each payday into an accessible emergency savings account. They will, however, have the option of changing this amount if they wish.
Back in 2019, Nest began work on its sidecar project, which looks at collating both short and long-term savings goals. This model allows savers to split their contributions between a Nest pension and an emergency savings pot.
Employees set the rate of contributions along with a savings target, and when money is taken from their pay, any contributions that are above their auto-enrolment payments are sent to the emergency savings account. Once this emergency account is full, the amount is put towards retirement savings, and where the account is completely drained, the split recommences.
Pensions Expert reported that executive director of Nest Insight, Will Sandbrook, had said:
“The savings tool appeals to many employees, particularly those less financially secure, and there’s early anecdotal evidence of a positive impact on financial wellbeing, resilience and confidence among those who have signed up to save.
But employee take up in our trial, and in similar models, is low. Finding ways to support people to overcome the behavioural barriers to getting started with short-term saving is a critical area for financial resilience research.”
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