Similar to the auto-enrolment of pensions, auto-enrolment savings see employees who meet certain criteria automatically being made a member of a savings scheme, without needing to ask to be a part of it. Employees still have the choice to opt out and, unlike pensions, their savings are accessible any time they want to use them.
Since 2012, employers have been gradually required to automatically enrol their eligible workers into a workplace pension scheme. This small action has transformed the future of millions.
In 2021, employees across the UK saved £114.6bn into their pensions. This is a real terms increase of £32.9bn compared to 2012, when auto-enrolment was first introduced, according to Department for Work & Pensions data.
It is anticipated that mirroring this initiative with auto-enrolment savings would have equally impressive results.
Trials with Bupa and Co-op, Nest Insight and Wagestream found that engagement with payroll savings jumped from 16 per cent to 71 per cent when given the auto-enrolment treatment.
While the responsibility of introducing these schemes does not lie with the employer alone, they should recognise the power of interventions and nudges that go with the grain of what people say they want to be doing, which is saving.
Final thoughts
Given that shift-based and frontline workers are more vulnerable to financial pressures, that is a huge majority of the workforce vulnerable to financial stress.
Long-term sickness now accounts for more than 30 per cent of inactivity, according to the Office for National Statistics, and we are seeing the "longest sustained rise" since records began. Supporting the financial wellbeing of employees is not only the right thing to do, it makes business sense.
There is a clear business case for levelling the financial playing field for employees, with improving productivity for more than a quarter of a workforce, reducing churn and boosting recruitment all compelling organisational benefits with a strong return on investment.
While major financial institutions often contribute to this pressure and do little to help, employers are, for many people, the only positive financial relationship they have in their lives.
This gives businesses a unique opportunity to ensure their employees are financially resilient, and by getting the right solutions in place they will reap the rewards of enhanced productivity, job satisfaction, retention and recruitment.
Our research shows that people know what choices they should be making – they are tired of hearing the same old tips and tricks – so employers should avoid the temptation to try to ‘solve’ financial wellbeing through education and information on its own.
Instead, they should take the time to understand the financial exclusion faced by their people and deliver financial wellbeing products that everyone can use, to turn the workplace into a real force for good when it comes to financial wellbeing.
