The Government has published its Financial Inclusion Strategy today, giving strong support for employers to offer ‘opt out’ payroll savings schemes.
The national strategy, which also looks at financial education in schools and access to basic banking services, has created a new body charged with encouraging the wider roll of of employer savings schemes, based on the success of the auto-enrolment regime.
The the new National Coalition of Employers will work alongside the Money and Pensions Service (MaPS) and The Investing and Saving Alliance (TISA) and providers like Nest to scale up workplace savings and to help boost employees’ financial security.
Nest Insight managing director Will Sandbrook says: “Nest Insight welcomes the centrality of workplace emergency savings in the Government’s new Financial Inclusion Strategy.
“As our trials of opt-out payroll savings models show, workplace savings reach the people who most need support, help them to save persistently over time, and are popular with employees and employers alike.”
He adds: “Not only are opt-out payroll savings effective, they are also inclusive. A growing body of evidence shows that managing life without the peace of mind and sense of control that a savings buffer gives takes a real toll, which can be harmful to people’s mental health and their relationships. Supporting people to save builds short-term resilience and long-term security. As the Economic Secretary rightly highlights, financial inclusion can be an engine for productivity and economic growth.”
TISA CEO Carol Knight adds: “We welcome the measures to make it easier for employers to support workers by diverting some of the earnings into savings, reducing the risk of it being swept away in the pressures of everyday budgeting. TISA is delighted to be part of bringing together a national coalition of employers to encourage this move and contribute to delivering a truly inclusive financial system.”
Independent Governance Group (IGG) head of policy and external affairs
Lou Davey says: “The plan to roll out payroll savings more widely is a welcome step and deploys the very best learnings from the pension industry’s hugely successful auto enrolment, tapping into the inertia of employees.
“Measures that encourage greater saving across society, to boost financial resilience both in the short term and long term can only be a good thing. Developing stronger savings habits has the potential to help close the retirement inequalities that we see, particularly for women and minority groups that are so often falling behind.”
However she adds that payroll savings measures must be structured to support saving in the context of modern working patterns, including the disrupted working patterns of those with caring responsibilities.