Nest Insight opt-out payroll savings trial reports surge in participation rates

Nest Insight says evidence presents opportunity to improve financial resilience

Jonathan Stapleton
clock • 4 min read
Nest Insight opt-out payroll savings trial reports surge in participation rates

Nest Insight’s trial of opt-out approaches to payroll-linked saving has reported that participation rates have jumped by 50% when compared to opt-in approaches.

The innovation arm of Nest said its research - Opt-out autosave at work - provided "compelling evidence" supporting the case for widespread use of opt-out payroll savings approaches in UK workplaces to help boost financial resilience.

Nest Insight began trialling opt-out approaches to payroll-linked saving in November 2021 with support from the BlackRock Foundation and the Money and Pensions Service (Maps).

In an opt-out payroll savings model, employees automatically start saving into their own accessible savings account through regular payroll contributions unless they choose not to - with only people who don't want to save having to take action.

The first real-world pilots were with Suez Recycling and Recovery UK and the credit union TransaveUK. Further trials followed with Bupa Care Services, Co-operative Group and financial wellbeing provider Wagestream.

Nest Insight said in all the trials, the opt-out approach dramatically boosted saving participation and over 93% of workers said they like the scheme, whether or not they themselves choose to save.

Around five in ten new workers at Suez are saving, as well as seven in ten new benefits app users at Co-op and Bupa, when opt-out approaches were used.

Nest Insight said these findings suggested that wider adoption of opt-out payroll autosave would help millions more to build a savings buffer.

Research trials manager Emma Stockdale said the results of these trials were "extraordinary".

She explained: "Savings participation is dramatically increased by using opt-out approaches, bringing it much more in line with the proportion of employees who say they want and need to save - somewhere between 40% and 70%, depending on the workplace context and provider.

"People are building meaningful savings buffers over time, and they're actively using their accounts by withdrawing money when they need it. Knowing that they're saving also gives people greater peace of mind and confidence, supporting financial wellbeing to improve over time."

Stockdale said the current data from these trials gave Nest Insight no reason to believe other areas of people's finances, including pension saving through auto-enrolment (AE), were negatively impacted by the savings initiative.

She noted: "The results are really positive. People want to save, and many can save, it sometimes just takes a bit of help to get started."

Nest Insight director of research and innovation Jo Phillips added: "It's clear from our research that opt-out payroll savings approaches have enormous potential to boost the financial resilience, mental health and productivity of millions of people. We have a huge opportunity here. For the most part these approaches are currently untapped.

"Over the coming months, we'll be bringing together industry and policymakers to explore how opt-out payroll savings approaches could be scaled. We'll be considering how to increase access to workplace savings solutions, including to employees working for smaller organisations, how opt-out payroll savings approaches could be widely implemented, and whether there's an opportunity to build emergency savings into the future evolution of pensions AE in the UK."

BlackRock Foundation managing director and co-president Gemma Gooch commented: "When we launched BlackRock's flagship Emergency Savings Initiative in 2019, we had the conviction that many workers, even those on lower and medium incomes, could save if they were provided with the appropriate products at the right time. This report reinforces that case and lays out a roadmap for employers and industry partners to help advance the financial well-being of workers across the UK.

"It is now time for employers across industries to build on the lessons shared in this report and provide emergency savings offerings to their employees at scale. This is good for the individual, good for businesses, and good for society at large."

Maps policy lead Michael Royce added: "The workplace is key to helping us increase by two million the number of working-age adults on low-to-modest incomes who are saving regularly. Nest Insight's research, with funding from us, is resulting in groundbreaking findings.

"Applying these at scale, could support the financial resilience of millions of workers, helping the UK achieve the ambitions set out in in the ten-year UK strategy for financial wellbeing."

Co-op culture and colleague experience director Nick Speight said the wellbeing of colleagues was a key priority for the Co-op.

He said: "Through listening to our colleagues, we knew that being able to regularly save money was really important for their overall financial wellbeing. We were keen to explore if autosave would be an effective way to help colleagues get started.

"By working with Nest Insight, Wagestream and Harvard to trial autosave with our colleagues we have been able to see that it is having a positive impact. We are pleased to have supported Nest Insight to build an important evidence base that other employers can look to when deciding the best ways to help people improve their financial wellbeing."

Nest Insight said it would continue to work with academics Sarah Holmes Berk, John Beshears, David Laibson and Jay Garg from Harvard University, and James Choi from Yale University to collect and analyse data from these trials for up to two years to track whether and how behaviours change over time.

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