Context

The Money and Pensions Service’s 2020 UK Strategy for Financial Wellbeing set a national goal, Nation of Savers, to get two million more ‘squeezed’ and ‘struggling’ adults in the UK saving regularly by 2030. Workplace saving schemes offer a potential route to contribute to this goal.

Working with a range of UK employers and providers, Nest Insight has reached over 150,000 employees in five years with three pilot workplace saving schemes, designed to support more people to save:

• A sidecar saving scheme, provided by Salary Finance and Yorkshire Building Society through five employers, uses an opt-in scheme to enable savings to be made automatically through payroll into an instant-access savings account, with any above-target savings automatically topping up their workplace pension.
• A new-worker app, provided through Transave and one employer, enrolled employees to automatically start saving £40 a month if they did not opt out or adjust the default setting.
• A benefits app, provided by Wagestream and two employers, randomised app users into three groups – a control group of opt-in employees, an active-choice group who were prompted to save, and an opt-out group who were automatically enrolled to start saving £40 a month if they did not opt out or adjust the default setting.

Robust evidence from the individual pilot schemes has already shown that workplace savings schemes achieve their potential when offered on an opt-out basis.

The study

By collating evidence from across the three pilots, Nest Insight worked with academics from Harvard and Yale Universities to address the following research questions:

• Is an opt-out approach as inclusive as more traditional, opt-in, approaches to workplace savings and are any groups less likely to save?
• To what extent does the opt-out approach overcome barriers that prevent people from saving in opt-in schemes?
• How well does it reach people who are more vulnerable to a lack of savings?

The study involved new analyses of three data sources:

• Administrative data from the new-worker and benefits app pilots, with nearly 5 million data points.
• Survey data from 931 employees in the benefits app trial, collected in February and March 2024 and matched to data from the app to capture employees’ demographic and socio-economic characteristics and how they perceived their employer, the app provider and the opt-out approach.
• Qualitative data from in-depth interviews conducted in February 2024 with 18 employees in the benefits app trial who were recruited through the survey, focussing on how they managed their money and the role of payroll saving.

Key findings

• Inclusivity: Opt-out approaches were as inclusive as opt-in approaches:
  • for people with different income levels: opt-out increased participation in similar ways across income levels (no significant differences)
  • for part-time workers: 42% of opt-out savers were part-time workers compared with 29% of those who started saving by actively signing up to save (p=.022)
  • by age, gender and ethnicity (no significant differences).
• Overcoming barriers: 62% of opt-out savers reported low or moderate financial confidence compared with 47% of opt-in savers (p=.001).
• Vulnerability due to lack of savings: 83% of those who saved under the opt-out approach did not already have £1,000 or more in savings, compared with 68% of people who saved under the opt-in approach (p=.006).
• Perceptions: The opt-out approach was received well by employees, whether they saved or not. 92% of those in the benefits app pilot were happy about the opt-out approach, or were neither happy nor unhappy with it.
• Active choices: Employees were making choices in opt-out schemes:
  • a significant proportion had chosen to opt-out (% not given)
  • by month nine in the benefits app pilot, 58% of savers in the opt-out group and 55% of savers in the active choice group had made at least one withdrawal, compared to 71% of savers in the opt-in group.

Points to consider

Methodological limitations

• The authors note that the employee populations involved in the pilots were not necessarily representative of all UK employees, but that all three pilot populations comprised high proportions of low- and moderate-income workers.
• Statistical significance testing was reported for most of the analyses.
• Figures are not always given to support assertions made in the report.
• Interpretation of the findings should be treated with caution as, in some parts of the report, new findings are mixed with evidence from other sources such that the contribution of the new study is not always clear.

Applicability

• The findings should be of interest to policymakers, providers and employers who have the potential to encourage saving through opt-out approaches in workplace schemes and other settings.

Relevance

• The findings are relevant given the Nation of Savers national goal set out in the Money and Pensions Service’s 2020 UK Financial Wellbeing Strategy.

Generalisability/transferability

• The ability to generalise the findings to other samples, schemes and populations is constrained by the limited scope of the analysis (which was bivariate and therefore did not control for confounding factors which could potentially explain differences and similarities between groups).