Speaking at Nest Insight’s emergency savings summit, the Minister revealed he had challenged FTSE 100 leaders over their payroll savings offers.
“I wrote to every chief executive of the FTSE 100 last year trying to say, ‘What salary savings are you making?’ The answer was that it’s pretty limited,” Opperman said, adding that less than 50% responded to him.
“You would be amazed and amazed at how few do. They’ll do some really nice things like double pension contributions, but while that’s an amazing thing, it’s no use when you’re in the middle of a pandemic and you’re really short on money,” he said. he declares.
Ultimately, the UK general public is not good at saving
“There are a lot of people who don’t have any savings, and that’s what the government has to worry about. Ultimately, the UK general public is not good at saving.
The summit – which brought together several speakers from regulators, the savings industry, the business community and stakeholders – found that while there was demand for such services, they were not always available. for employees.
Lessons from self-registration
Auto-enrollment could have the same impact on workplace savings plans as pensions if employers understand its benefits to their businesses and have the tools to implement it, according to several Nest Insight Summit speakers .
Jo Phillips, director of research and innovation at Nest Insight, said auto-enrollment in workplace savings plans could have a similar impact to auto-enrollment on pensions.
She said: “We know auto-enrollment has made a huge difference in retirement savings, and we believe we could use this same mechanism to increase participation for people who want to save for the short term.
“We’re not saying we think all employees should have to do this like with pension regulations, but what if they did? Could they, and how would it work?
Phillips continued, “We explored that question. We explored the regulatory considerations, how you would communicate them, and how you would design them. And we’re currently six months into testing an automatic employee savings registration with deregistration approach. [recycling and waste management company] SUEZ.
While the results of the trial will be shared later this year, Phillips said the participation of those who are not actively withdrawing is over 40% and there has been no increase in withdrawals from retirement.
Open to other forms of savings
Tim Flacke, executive director of US social impact organization Commonwealth, said many people under financial stress might not be aware of the concept of workplace savings.
He said: “There are people who have never been able to save, who suddenly find themselves in this new country with an identity that they never had. [Saving is no longer] something that other people do – people with more money, or more savvy, or those who grew up in a certain background.
“Having this new identity also opens you up to other kinds of savings.”
Roxana Prisacaru, head of evaluation at the Money and Pensions Department, said encouraging workplace savings is part of its nation of savers pillar which targets 2 million people in segments “tight” and “struggling” to start saving regularly, with high demand among employees for such schemes.
Based on previous research, she said shadow saving was effective in helping non-savers become savers, particularly for low-income people earning less than £20,000-25,000 a year and young people .
However, several factors can also make a difference, with users being attracted to automatic registration and easy registration processes. In addition, default savings levels were also crucial when designing employee savings plans.
Nevertheless, there were significant obstacles to the programs – many savers were already saving in other products, inertia and concerns about data security.
Katie Duxbury, payroll services manager at Bupa, said employers who develop a better understanding of their staff and can help them through more difficult times will benefit in the long run.
Hymans Robertson seeks AE credits to fight gender gap
Hymans Robertson has called for the creation of self-enrollment credits in a bid to close the gender pension gap, which would see the government pay pension contributions for those on career breaks.
She said: “The more an employer helps someone solve problems in their life, the more likely that person is to stay with that employer.
“So to some extent, putting benefits in place creates rigidity and helps that person resolve their life. That person’s knowledge stays in the organization, that organization thrives, and the person thrives because that organization can deliver more benefits. »
Duxbury added: “We always have to be in a position because we’re not legally mandated to do this stuff, where there’s a business imperative to do it.”