A coalition of employers has backed a new initiative aimed at increasing employees’ ability to save for both the short and long term.
The National Coalition for Workplace Savings was launched this week with the aim of boosting financial resilience. It is supported by Nest Insight, the research arm of the Nest master trust, which has led research into the benefits of so-called “sidecar savings”.
The coalition is also supported by the Money and Pensions Service and The Investment and Savings Alliance, with employers including Bupa, Co-op, First Bus, Next, and Travelodge among the first members.
At the launch of the coalition, Rachel Blake, economic secretary to the Treasury, said: “Everyone should have the opportunity to build financial resilience, but we know that when household budgets are stretched, saving can be difficult…
“Working with employers across sectors, the coalition will help make workplace savings schemes easier to access and support more working people to build regular savings habits and a financial safety net.”
The launch comes as new research shows millions of workers have no emergency savings, are struggling with debt, and are failing to save adequately for retirement.
Analysis published this week by the City of London Corporation and financial wellbeing provider Nudge found that an estimated 8.2 million employees – almost a quarter of the UK workforce – have no emergency savings whatsoever.
“Without urgent action to improve financial literacy and support in the workplace, too many people will continue to face unnecessary financial stress and uncertainty.”
Chris Hayward, City of London
This leaves them exposed to unexpected financial shocks such as job loss, illness or rising living costs, the organisations warned.
Meanwhile, an estimated 44% of employees said they either did not know whether they were saving enough for retirement or did not understand how their retirement savings worked.
Chris Hayward, policy chairman at the City of London, said: “Millions of people across the UK are understandably struggling with their finances. Despite the challenging economic environment, many were never taught how to build resilience to manage shocks, nor how to plan for the future.
“Without urgent action to improve financial literacy and support in the workplace, too many people will continue to face unnecessary financial stress and uncertainty.”
The report’s authors urged employers to provide more personalised financial education, while calling on government and regulators to expand workplace financial literacy initiatives and provide clearer guidance on financial advice rules.
Tim Perkins, chief executive officer and co-founder of Nudge, said: “This report shows that workplace financial education plays a critical role in improving financial resilience and health. When people understand how to manage their money, they are better prepared for financial shocks and more likely to improve their overall financial situation and wellbeing.”
