Nest Insight will trial an ‘opt-out’ payroll savings approach that aims to help employees build up emergency savings.
The research arm of the government-backed auto-enrolment provider said the project will build on findings from its ongoing sidecar savings trial.
The Money and Pensions Service (Maps) and BlackRock will both expand their support for Nest Insight to facilitate the research, which will test whether an opt-out joining mechanism could enable more people who want to save through payroll to begin to do so.
Nest Insight first launched its trial to test the impact of a combined savings tool or ‘sidecar savings model' in 2018. The hybrid workplace savings tool, called Jars, combines short- and long-term savings has high support, but low employee sign-ups.
The research said the aim of its opt-out payroll savings approach is to increase participation among people who want to save through payroll for the shorter-term "but don't get around to it". It will also preserve the choice not to save for those who do not want to, or cannot.
The new workplace trial will be launched later this year; if employees do not opt out, they will automatically start saving a default amount into an accessible emergency savings account each time they are paid. They will be able to make changes to the amount if they want to.
Nest Insight executive director Will Sandbrook said: "We're delighted that the BlackRock Foundation and Maps are expanding their support for Nest Insight's workplace emergency savings research. Our partnership with both organisations has already enabled significant learning in this space."
He continued: "There are positive signs from our sidecar savings trial [and] finding ways to support people to overcome the behavioural barriers to getting started with short-term saving is a critical area for financial resilience research.
"We're really excited about the next phase of this research, which, alongside what we're learning from the ongoing sidecar savings trial, should make a real contribution to our understanding of what works in facilitating short-term saving and how that can support longer-term financial security."
Minister for pensions and financial inclusion Guy Opperman said the project was a welcome one as Covid-19 had significantly heightened the need for financial resilience.
"I have huge confidence that payroll saving schemes, offered by employers, will help people to build a financial buffer to absorb short-term financial shocks. These schemes help create good savings habits and I encourage employers to offer all their employees a voluntary, payroll-deducted, emergency savings scheme," he said.
"I look forward to the next phase of Nest Insight's workplace emergency savings research programme, and hope it will help accelerate action towards greater rainy-day saving."
