A new initiative to help UK adults build rainy day savings pots has been launched with the formation of the National Coalition for Workplace Savings.
Scheme Aims to Provide Financial Safety Net
The scheme could give more people a financial safety net to cover unexpected bills and help some avoid turning to expensive debt. The employer-led coalition represents a range of sectors including retail, hospitality, transport, facilities management, the public sector and charities.
It collectively employs about 400,000 people and includes organisations such as the Co-op, First Bus, Next, the Department for Environment, Food and Rural Affairs (Defra), Travelodge, Mitie and StepChange.
Government Support
Rachel Blake, Economic Secretary to the Treasury, said: "We want people to build up a savings habit." She added: "We all know that having some savings ready for a shock, whether your boiler breaks, your car breaks or you're not able to do as much work as you wanted to… we all know that having some savings can help with that, both with the practicalities of being able to cover your costs and also some of the emotional and financial consequences of having a financial shock."
Workplace savings schemes help people build up regular amounts into a savings pot. Employees using such schemes may start saving a default amount via payroll into their own easy access savings account, with savings held in cash, which can be withdrawn at any point without penalty.
Building on Pension Success
Millions of people are already used to building up their retirement savings through pension schemes run by their employers. Ms Blake said of the new coalition: "Having a workplace scheme, where it's really straightforward to sign up to, where some of that initial thinking has already happened, means it's much more likely that people will take up the habit."
She added: "I really hope that it builds up both the number of people who have savings as well as the scale of savings that they have, because there's far too many people who don't have any savings at all."
Avoiding Expensive Debt
Ms Blake also said the initiative could help some people avoid taking on debts, adding: "We don't want people having to turn to expensive debt to cover these emergency shocks and we also want this to become a longer-term habit so that people have confidence to save and confidence to not have to turn to debt or credit."
The coalition was initiated through the Government's financial inclusion strategy and will work to increase the number of UK employees accessing and benefiting from workplace savings by championing uptake, sharing best practice and supporting innovation over the coming years.
Employer Participation
It is encouraging employers across the UK to sign up to bolster their employees' financial security and work together to support people to save. Employers can join the coalition by inquiring through its website, or contacting the Money and Pensions Service, Nest Insight or Tisa (The Investing and Saving Alliance).
Ms Blake said: "We really want to see more employers sign up to the scheme, I think this national coalition approach of bringing industry together to encourage each other is a really great way forward and I would encourage all employers to look into it."
She added: "One of the points that I've been talking to employers about today is they know that having a happy and healthy workforce is good for their organisation and their business – and being happy and healthy in your financial life is a really important part of that as well."
Industry Leaders Comment
Claire Costello, chief people officer at the Co-op Group and the coalition's chairwoman, said: "With growing evidence of the benefits provided by workplace saving schemes, this collective of employers, supporters and partners will help more people build a financial safety net."
Sarah Williams, chief people officer at OCS UK & Ireland, said: "For many colleagues, the gap between a manageable month and a difficult one comes down to whether something unexpected happens. A broken car, a school trip, an appliance that needs replacing. Workplace savings schemes work because they're built around the realities of how people actually live."
