Preliminary findings from Nest Insight’s trial into a new opt-out approach to workplace emergency saving have been “very encouraging”, with an employee participation rate amongst those who experienced the auto-save approach of 53 per cent.
This compared to 1 per cent participation amongst employees who had to opt in to save, with the findings therefore highlighted as demonstration that an auto-save approach, rather than an opt-in approach, is the most effective way to improve payroll saving participation.
A similar trend was also seen in the amount that people were saving, as auto-savers had an average balance of £129.99, compared with an average balance of £29.34 amongst the opt-in savers.
The trial results also showed no evidence that people opt out of their pension at higher rates when simultaneously offered payroll auto-save compared to when offered opt-in payroll saving.
Nest Insight confirmed that the long-term impacts of payroll auto-save on workplace pension saving will be explored in future analyses, and that it will continue to assess the effectiveness of the approach until the end of 2023 to understand the long-term impact on participation rates, balances, and the impact on financial wellbeing.
Nest Insight director of research and innovation, Jo Phillips, said that the group was “very excited” by the early trial results, highlighting the findings as indication of the effectiveness of auto-save as a way of supporting payroll saving among employees.
She stated: “Those least likely to have savings tend to also be those least likely to make active choices, due to limited bandwidth and lower levels of financial confidence.
“In an auto-save model, however, the need for an active decision falls to those who know they don’t need or want to save; a group more likely to be financially confident and to be saving elsewhere.
“As the cost of living continues to rise and impact households across the UK and beyond, employers may be looking for affordable ways to enhance support for employee financial resilience.
“An accessible savings pot can be thought of as a self-funded insurance policy, allowing an individual to pay for unexpected expenses without having to turn to expensive forms of credit.
“We’ve also seen from our wider programme of work that emergency savings accounts can be used to manage expenditure across a pay period; a strategy that could be really helpful in the context of rising costs.”
Suez Recycling and Recovery UK head of compensation and reward, Michelle Sutton, added: “We recognise that financial difficulties have the potential to affect both physical and mental wellbeing.
“Rising living costs have shone a light on financial resilience and we’re delighted that the early trial results show the scheme is helping more of our people build up a buffer to draw upon for unexpected outlays.”
The trial, which was launched in November 2021, automatically signed new joiners at Suez Recylcing and Recovery UK up to save £40 per month unless they choose to opt-out, and compared them to a control group, who continued to be offered payroll saving on an opt-in basis.
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