The research unit of NEST has launched its sidecar savings trial and revealed the organisations that will be taking part in the research.
The master trust's sidecar savings model is aimed at improving the financial resilience of workers from today and into their retirement. NEST Insight believes the savings product, which will split contributions between a pension pot and a ‘rainy day' fund, will aim to improve short-term financial health.
In the sidecar structure, contributions above the auto-enrolment (AE) minimum would be managed by a mechanism designed to create an optimal level of liquid savings, while maximising long-term savings.
Savers' contributions would be distributed between an emergency savings account and their pension pot. When the amount in their emergency account reaches a specific threshold, contributions would begin moving into the pension pot.
Retailer giant Timpson, which has more than 5,600 workers, will be the first employer to introduce the trial. Its chief executive James Timpson said: "We know that money worries can have a really negative impact on colleagues' health, happiness, and productivity at work. We're delighted to be taking part in NEST Insight's sidecar savings trial to help our employees become more financially resilient, both today and into their retirement."
Workers who participate in the trial will be monitored for two years to assess sign-up rates, the amount of savings they make, and how their financial wellbeing is affected.
It comes after research by the Money Advice Service (MAS) in 2016 found that less than half of the working population have £500 or more in liquid savings to hand for emergencies, while 26% have nothing.
The JPMorgan Chase Foundation and the MAS will be providing support for the trial.
MAS strategic lead on budgeting and saving Michael Royce said: "Many millions of adults who are ‘financially squeezed' or ‘financially struggling' lack a savings buffer to help them cope if they were to face an unexpected bill. All too often, these costs can lead to financial difficulty." He added that they are "delighted to be partnering with NEST Insight to test the innovative concept of sidecar Savings."
JPMorgan Chase Foundation head for EMEA and LatAm, Hang Ho said: "Reducing the impact of unexpected expenses on low income households through the development of innovative solutions designed around people's lives is vital."
The trial is expected to be in workplaces over the next few months, with workers able to make contributions from the beginning of 2019.
"It's vital that people save for the retirement they want, and this Government is committed to ensuring that people get the help they need to plan ahead.
A spokesperson for the DWP said: "Nest's 'sidecar' approach is an innovative concept, potentially offering a new way for people to build up a financial buffer to protect them from unexpected bills while continuing to save in workplace pensions. We are interested to see how the trial develops and will be watching it closely."
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