TransaveUK has partnered with research company Nest Insight and employer partner SUEZ recycling and recovery UK to test the effectiveness of an opt-out approach to workplace emergency saving. This innovative research trial, believed to be one of the first of its kind, will examine whether making payroll saving the default enables many more workers, who would benefit from building up a savings buffer, to get started.
Under the trial, new joiners to SUEZ, a leading recycling and waste management company, will be automatically signed up to payroll saving with Transave if they don’t opt out. It’s then believed that the automatic nature of this approach will reduce barriers to saving by reducing sign-up friction and overcoming inertia – people’s tendency to do nothing when faced with a decision. This change, similar to the approach used for pensions auto enrolment, preserves employees’ choice to decide what to do with their money, whilst removing the need for them to complete a full sign-up journey if they want to start saving. Instead, there’s only one decision to make: whether to opt out. Once a member of Transave, employees will then be able to make changes to the amount they save if they want to, quickly withdraw their money if they need it and can stop saving at any time.
Together with academics, Sarah Holmes Berk, John Beshears and David Laibson from Harvard University, and James Choi from Yale University, Nest Insight will assess the effectiveness of the approach. The trial will compare around 600 SUEZ new-joiners who are offered payroll saving with Transave on an opt-out basis, to a control group who will continue to be offered payroll saving on an opt-in basis. Research will be conducted for one year to assess participation rates, savings behaviours, and the impact on employee financial wellbeing.
Michelle Sutton, Head of Reward and Pensions at SUEZ, commented:
“Our approach to supporting our people encompasses all aspects of their wellbeing, including their finances. This trial complements our existing portfolio of financial benefits that includes an opt-in savings scheme with Transave, discounts with a broad range of high street retailers and webinars on financial wellbeing topics such as budgeting, pensions and fraud prevention.
“By setting the default savings amount at £40, we hope that it will be an accessible and user-friendly way for staff to build up a savings buffer to draw upon for those unexpected outlays, such as broken appliances or emergency vets fees.
“We have taken care to ensure communications to our new starters on the opt-out model were fully transparent, empowering them to decide if saving is right for them, and we’re looking forward to hearing from those who save, on how the trial affects their financial position and attitude to saving.”
Guy Opperman, Minister for Pensions and Financial Inclusion, commented:
“Employers have a vital role in helping their staff build greater financial resilience. Schemes offered by employers, such as payroll savings, can help people build a safety net that enables them to withstand short-term financial shocks.