Nest Insight has launched its new ‘sidecar savings’ trial in a bid to boost employees’ financial resilience. The first employer in this trial will be Timpson, who will use the scheme with its 5,600 workforce.
Under this ‘sidecar’ model, contributions over the auto enrolment minimum are managed through a mechanism designed to create an optimal level of liquid savings, while also maximising long-term savings.
To do this contributions are initially split between an emergency savings pot and the auto-enrolled pension. When the balance of the emergency account reaches a predetermined threshold level, contributions are fully invested into the pension.
If the employee accesses these emergency savings, then further contributions are again split between the two, until the savings cap is reached again.
Nest has developed this scheme in response to recent research from the Money Advice Service which shows only 44 per cent of workers have savings of more than £500, and 26 per cent have no savings at all.
The JPMorgan Chase Foundation and the Money Advice Service (MAS) will be providing support for the trial. The sidecar account will be provided by Salary Finance, working alongside a NEST pension pot.
Money Advice Service strategic lead on budgeting and saving Michael Royce says: “We are delighted to be partnering with Nest Insight to test the innovative concept of sidecar savings. We hope that it builds on emerging evidence that workplace savings initiatives can be an effective means of helping people enhance their financial resilience throughout their working lives both for the short-to-medium term and for when they move into retirement.”
Salary Finance chief executive Asesh Sarkar adds: “Our latest research found that 18.6m working people in the UK (53 per cent) lack financial resilience, and 13.5m regularly run out of money.
“We want to help millions of employees around the world become financially healthier and happier. Our product has the potential to address a significant problem in society – the lack of emergency savings employees have – and we are excited to see the impact it has, working with progressive employers like Timpson.”