Nearly all participants in a 2-year-old U.K. savings trial are choosing to go with the default option of setting aside a portion of their monthly earnings for emergencies.
As of April 30, about 300 participants in the NEST Insight program were saving on average about £100 ($139) each month and had saved an average £552 in 12 months.
About 25% also opted to save an additional amount into the rainy day account outside of payroll deductions, typically adding about £300.
The results of the program are encouraging, said Jo Phillips, director of research and innovation at Nest Insight, which seeks to address the shortfall in the amount Britons have at their disposal to meet urgent expenses.
"The evidence we've gathered so far suggests that the savings tool is bringing people into saving who may not have previously had any money put aside, and there are already anecdotal indications of a positive impact on financial well-being, resilience and confidence," Ms. Phillips said Thursday in a news release.
Known as the Jars project, the NEST Insight experiment enables participating employees to save money to a liquid account, known as a sidecar, through automatic payroll deductions, as a means of covering emergency expenses.
After a short-term savings target of £1,000 is reached — a limit which was set in the trial by NEST Insight — additional savings then flow to an employer-sponsored defined contribution retirement savings plan.
Current participants in the trial, which began in July 2019, are employees of telecommunications provider BT, broadcaster ITV, debt advice charity StepChange, shoe repair service Timpson and the University of Glasgow.
Nest Insight's study of the trial also showed that 15% of participants changed their monthly contribution to the sidecar account at least once and 75% of them increased it.
At the same time, 40% of users made at least one withdrawal from the account and 36% of those that made more than five withdrawals were employees who were struggling financially before the trial.
Participation is currently low, although in line with the results of other voluntary payroll saving tools, NEST Insight said, adding that 98% of employees who said in principle Jars will help them have not signed up. "There is a real gap between intention to save and action," Ms. Phillips said during a webinar Thursday.
NEST Insight is a research unit of the £17 billion defined contribution multiemployer plan National Employment Savings Trust, London.
