A workplace emergency savings "opt-out" research program being launched by NEST Insight is being supported by BlackRock and the Money and Pensions Service, the NEST research unit said Thursday.
NEST Insight is a research unit of the £17 billion ($23 billion) defined contribution multiemployer plan National Employment Savings Trust, London. MAPS is a financial literacy advocacy organization sponsored by the U.K.'s Department for Work and Pensions.
The new program will build on an ongoing sidecar savings trial, testing whether an opt-out joining mechanism will help more people save through payroll deduction. It is seeking one or more employers and savings providers with which to collaborate.
Known as the Jars project, the NEST Insight experiment started in 2019 enables participating employees to save money to a liquid account, known as a sidecar, through automatic payroll deductions. After a short-term savings target of £1,000 is reached, additional savings flow to an employer-sponsored defined contribution retirement savings plan.
Current participants in the trial are employees of telecommunications provider BT, broadcaster ITV, debt advice charity StepChange, shoe repair service Timpson and the University of Glasgow.
In July, Nest Insight reported that nearly all participants choose the default option of setting aside a portion of monthly earnings for emergencies. As of April 30, about 300 participants were saving on average about £100 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.
NEST Insight reported that 98% of employees who said that in principle Jars will help them have not signed up.
The new workplace trial launching later this year will give employees the choice of opting out of payroll deductions at any time, or otherwise automatically start saving a default amount into an accessible emergency savings account.
Nest Insight Executive Director Will Sandbrook said in a news release that overcoming behavioral barriers to getting started "is a critical area for financial resilience research."
Partnership with the BlackRock Foundation and the Money and Pensions Service "has already enabled significant learning in this space. We're also thrilled to welcome BlackRock on board as a strategic partner of the overall Nest Insight program," Mr. Sandbrook said. "We're really excited about the next phase of this research."
U.K. Minister for Pensions Guy Opperman said in the release: "We have all seen the extraordinary success that automatic enrollment has had in transforming pension saving for millions of today's workers, and one of the many things this past year has emphasized, is the importance of building financial resilience. I have huge confidence that payroll saving schemes, offered by employers, will help people to build a financial buffer to absorb short-term financial shocks."
In addition to the opt-out research, NEST Insight is setting up an expert working group to look at the legal and regulatory barriers to an opt-out approach and ways to make it more viable for employers, identifying best practices in communicating with potential savers, and collaborating with several workplace savings providers on future trials.
