- Two Yorkshire employers test new approaches to encourage workforce saving via credit unions
- Initial findings show payroll savers are more likely to regularly put money away
New research funded by the Money and Pensions Service will test how saving through a workplace payroll scheme can help people improve their financial wellbeing, and ultimately encourage more employers across the UK to offer similar initiatives.
The trials will examine for the first time how workers could benefit from being able to save or repay affordable loans through automated deductions from their salary with a credit union. The studies are being run by the Financial Inclusion Centre, and tested amongst the workforces of Leeds City Council and York Teaching Hospital NHS Foundation Trust. Both offer payroll savings schemes through Leeds Credit Union.
The initial findings from the study suggest that those who save with a credit union through payroll are directly benefiting from such schemes:
- Three quarters (78%) of people who save with a credit union through payroll deductions are far more likely to save regularly compared to just over half (55%) of non-payroll savers who are with a credit union, and just under half of staff (47%) who are not members of a credit union at all
- Almost all payroll savers (96%) would recommend this type of scheme to their co-workers, and said ease and simplicity of this type of saving (79%) is the biggest draw
- Almost two thirds (62%) of people not already saving via payroll deductions were unaware that they could save in this way
Research has shown that increasing levels of savings enhances people’s financial resilience and their ability to deal with shocks such as unexpected bills. However, MaPS figures show that 11.5m UK adults have less than £100 in savings and investments1.
The research looking at the financial wellbeing of staff at the two Yorkshire employers also reveals the financial struggles facing workforces:
- Half of workers (50%) agreed that their financial situation makes them anxious
- A third (37%) agreed that money worries had affected their health (physical and mental wellbeing) over the past year
- 31% agreed that money worries affected their family relationships over the past year
- 18% agreed that money worries had affected their work over the past year
Michael Royce, Senior Policy and Propositions Manager at the Money and Pensions Service said: “An increasing number of employers are recognising the need to address money worries amongst their workforces, with research showing 22% noted productivity was reduced due to money-related stress2. We hope these trials bring to light the important role employers have to play in improving the financial wellbeing of their staff, and will move them to offer similar payroll saving schemes.”
Chris Smyth, Chief Executive of Leeds Credit Union said: “We welcome the research which demonstrates the value of payroll saving schemes towards the financial wellbeing of employees. At Leeds Credit Union we work with a range of employers to provide them with an effective free payroll scheme they can offer to their employees.
“We have found it produces benefits to both the employer through reduced stress and anxiety in the workplace and of course to their employees who benefit from easy access to saving accounts and affordable credit, allowing them to plan for any unexpected outgoings.”
Over the next 18 months the trials will examine how to increase participation and ongoing saving. This will be done through two studies. The first study will be carried out at York Teaching Hospital NHS Foundation Trust and will involve an internal campaign promoting payroll saving to colleagues, establishing payroll saving as a ‘social norm’ using staff case studies to influence others.
Across the Leeds City Council workforce, a study will test the incentives of one-off cash prize draws to encourage staff to join the credit union and set up monthly payroll saving. Another prize draw will be run for those who maintain the saving habit over six months.
The results will be used to provide employers across the UK with practical tools and promotional materials to encourage staff to save via automated payroll deduction.
Case study: Lydia Morrison, 39, Bed Manager at York Teaching Hospital NHS Foundation Trust, currently saving through payroll deduction with Leeds Credit Union
Mother of three Lydia used to find it really hard to put money away and described herself as a terrible saver. She joined her employer’s scheme so she could save for a 40th birthday celebration next year. She puts away £50 per month, which over 14 months will amount to a nice sum. While Lydia doesn’t notice the money is gone every month, it’s nice to know the pot can be accessed for emergencies. Each month, she can clearly see what she has left to spend, and doesn’t have to worry about putting money away as it’s already taken care of. After her milestone birthday, Lydia is going to continue saving through the scheme for Christmas and other holidays.
Notes to editors
- 2018 Financial Capability Survey, Money and Pensions Service
About the Money and Pensions Service
The Money and Pensions Service vision is everyone making the most of their money and pensions.
The new organisation brings together the free services delivered by the Money Advice Service, The Pensions Advisory Service and Pension Wise.
The arm’s-length organisation is sponsored by the Department for Work and Pensions, with a joint commitment to ensuring that people have access and guidance to the information they need to make effective financial decisions over their lifetime. The organisation also engages with HM Treasury, which is responsible for policy on financial capability and debt advice.
Working hand-in-hand with stakeholders throughout the UK, the Money and Pensions Service ensures that money and pensions guidance is available to those that need it, adapting to people’s changing needs throughout their lives, offering services and appointments over the telephone, online and in person where appropriate.
For further information for stakeholders, they should visit the Money and Pensions Service website www.moneyandpensionsservice.org.uk
Consumers can continue to access free guidance about their money and pensions via the following websites and help lines:
www.moneyadviceservice.org.uk 0800 138 7777
www.pensionsadvisoryservice.org.uk 0800 011 3797
https://www.pensionwise.gov.uk/en 0800 138 3944
About the Financial Inclusion Centre
The Financial Inclusion Centre (FIC) is an independent research and policy innovation think-tank dedicated to promoting financial inclusion and fair, efficient, competitive and accountable financial markets.
About Leeds Credit Union
Operating for over 30 years, Leeds Credit Union (LCU) is one of the leading community-based credit union with over 37,000 members, offering straightforward, affordable financial services.