Opt-out workplace savings schemes can be a game-changer – extremely effective in inclusively supporting low- and moderate-income workers to build greater financial security and peace of mind. I’m thrilled to see that today, Co-op has announced that it is expanding its savings scheme, following a successful trial with Nest Insight. The scheme is designed to help its workforce build financial resilience by automatically setting aside a portion of wages, for anyone who doesn’t opt out.
Since being part of the trial, Co-op has seen the numbers of people in its workforce who are saving soar, with 7 in 10 of colleagues on the trial saving. Co-op is planning to extend access to thousands more colleagues over the coming months, with a focus on frontline employees who may face financial uncertainty. On average, colleagues participating in the scheme have saved £100 after four months and £200 after eight months, demonstrating the scheme’s effectiveness in helping colleagues build financial security over time. Many of these are new savers who did not have any savings before.
It’s great to see Co-op acting on the huge potential to improve financial resilience, mental health and productivity for its valued colleagues. Claire Costello, Chief People and Inclusion Officer at Co-op, said: “Our colleagues told us they needed help to start saving, especially for the unexpected, and autosave has proven to be a simple but powerful way to offer that support. We’ve seen the difference it makes in helping people feel secure, confident, and in control of their finances. I’d encourage other employers to consider how this type of support could work for them too – together, we can make a positive, long-term impact on financial resilience and wellbeing. By making colleague financial wellbeing a core priority, we’re also taking action on social mobility, a crucial ambition for Co-op and one that’s central to our vision. As employers, we have a vital role to play in creating a workplace that empowers growth, and I’m proud that Co-op is leading on this.”
Mayor of Greater Manchester, Andy Burnham, said: “Due to the cost of living crisis, too many people across our city-region are facing financial worries and anxieties about covering life’s essentials. This new approach from the Co-op and Nest Insight can help make saving feel manageable, and bring a real sense of security and peace of mind. It’s a simple but effective scheme that helps to build financial resilience, and I would encourage employers everywhere to look at introducing similar measures to help support people through what is still a tough time.”
The opt-out approach piloted at Co-op, automatically enrols colleagues to save a default amount each month unless they choose not to participate, allowing them to build a financial buffer without having to take additional action. Colleagues can change the amount they are saving and access their savings at any time without fees or penalties, making this approach flexible and supportive of unexpected financial needs.
Since 2018, Nest Insight has been researching and trialling tools to help people build up a savings buffer, both alongside their pension (as a ‘sidecar’ savings model) and as a standalone savings pot. With the support of programme partners BlackRock and the Money and Pensions Service (MaPS), we’ve run successful real-world trials of an opt-out approach with major employers Bupa and SUEZ, as well as with the Co-op.
The rich and robust evidence base built from these trials tells us that workplace payroll savings schemes can be powerful, but only achieve their potential when offered under an opt-out basis. As with auto-enrolment into pensions, an opt-out approach to workplace savings overcomes structural and behavioural barriers to help people who want to get started with saving to do so.
There is huge potential here to improve financial resilience, mental health and productivity for millions of people. Supporting employers to enrol their workforce into savings on an opt-out basis should be a central pillar of financial inclusion.
We are very grateful to The BlackRock Foundation and to the Money and Pensions Service, whose support for Nest Insight made these trials possible, and to all the employers and providers who have worked with us.
Jo Phillips, Director of Research and Innovation, Nest Insight
