The government has set out plans to expand payroll savings initiatives as a core part of its new financial inclusion strategy, published this week.
Nest Insight, which has pioneered research and real-world trials of emergency savings initiatives, has received research funding from the Department for Work and Pensions (DWP) to carry out further work on savings for the self-employed, the Treasury said today (5 November).
Meanwhile, the government has also announced reforms to the National Curriculum, which include a requirement for financial education to be taught in primary schools.
“I want to see a financial services system that works for everyone, where people can access the products and services they need to build their financial resilience and achieve their goals.”
Lucy Rigby, economic secretary to the Treasury
Financial sector commentators have welcomed the developments, highlighting the importance of learning lessons from the success of auto-enrolment and improving financial resilience among the UK population.
In her introduction to the Financial Inclusion Strategy document, Lucy Rigby, economic secretary to the Treasury, said: “When people are financially excluded, participation in our economy and society more broadly can be limited – sometimes extremely so.
“But when people are included, a potential shock can become a manageable obstacle, and aspirations can become achievements.
“These benefits have knock-on effects for our wider society, making financial inclusion a bridge to opportunity and an engine for growth. I want to see a financial services system that works for everyone, where people can access the products and services they need to build their financial resilience and achieve their goals.”
Self-employed savings research funded by DWP
The Financial Inclusion Strategy document stated: “The Department for Work and Pensions has provided further funding for the next phase of research by Nest Insight into savings for self-employed people.
“While the focus of this research will be on retirement savings, rather than the emergency savings buffer that this strategy seeks to address, Nest Insight will also explore the role that an accessible savings pot could play alongside a retirement saving model for the self-employed.”
The government has established a new organisation, the National Coalition of Employers, which the Treasury said would help “drive awareness and adoption of workplace savings schemes”.
In August, the Financial Conduct Authority set out regulatory guidance for companies seeking to offer payroll-based emergency savings funds, with the aim of clarifying how employers can support financial resilience among their staff.
Financial education to come to primary schools from 2028
The Department for Education has announced a significant overhaul of the National Curriculum this week, including bringing financial literacy into primary schools as part of a wider “citizenship” element of teaching.
The government said £15m was to be directed from the dormant assets programme to help fund related initiatives.
Economic secretary Lucy Rigby said introducing financial education to the primary school curriculum was “a key intervention to build financial skills and confidence and will help young people navigate the financial system as they get older”.
“Children encounter spending, digital payments, advertising and influence before they can even spell money, and they deserve the tools to navigate those experiences.”
Carol Knight, TISA
The Investing and Saving Alliance (TISA) and its Financial Education Council have campaigned for financial education to be part of the curriculum for years, arguing that children are being exposed to money and finances earlier in their lives.
Carol Knight, TISA’s chief executive, said: “Teaching children about money is like explaining the rules of a game they’re already playing; with greater understanding, they can take part with confidence rather than uncertainty. Children encounter spending, digital payments, advertising and influence before they can even spell money, and they deserve the tools to navigate those experiences.
“This review rightly recognises that financial education is a core life skill, not an optional extra. TISA strongly welcomes the decision to include it as a compulsory part of the primary curriculum – something we have long been calling for.”
Nici Audhlam-Gardiner, chief executive of Foresters Financial and chair of the Financial Education Council, added: “Research suggests that relevant and engaging financial education at multiple points of a young person’s life leads to good savings habits and a better understanding of future financial decisions.
“Starting this education at primary school is key. We look forward to the details behind the review, and in identifying how financial providers can best support and partner with schools in delivering this critical life skill.”
Research from Nest Insight, funded by MaPS, the BlackRock Foundation, and JPMorganChase, demonstrates that payroll savings can effectively help people to save if behavioural support is put in place , and indicates that there is no adverse effect on pension contributions. However, the number of employers across the UK offering these schemes is notably small relative to the scale of potential impact.
The Ministry of Defence (MoD) has been running a payroll savings scheme for members of the armed forces family since 2015; 25,171 Service Personnel, Veterans and Civil Servants are members of Joining Forces which is supported by Serve and Protect Credit Union, PlaneSaver Credit Union, and London Mutual Credit Union. Many NHS Trusts in England now also provide payroll savings schemes for their staff. Following a pilot with the Animal and Plant Health Agency, Rural Payments Agency, and the Veterinary Medicines Directorate, a payroll savings scheme, alongside other employee benefits, has recently been launched for staff working at the Department for Environment, Food, and Rural Affairs (DEFRA), the Environment Agency, Natural England, and the Marine Management Organisation.
A central part of the strategy is a commitment to increasing levels of emergency savings, building on Nest Insight’s research, and the launch of a new National Coalition of Employers to drive uptake of workplace savings schemes, co-led by Nest Insight.
The Financial Inclusion Strategy highlights the strong evidence Nest Insight and others have built, which shows that opt-out payroll savings can support huge numbers of working people to save and to build a financial cushion, as well as sitting alongside and complementing auto-enrolled pension saving.
Will Sandbrook, Managing Director of Nest Insight, said: “Nest Insight strongly welcomes the centrality of workplace emergency savings in the Government’s new Financial Inclusion Strategy. As our trials of opt-out payroll savings models show, workplace savings reach the people who most need support, help them to save persistently over time, and are popular with employees and employers alike.”
“Not only are opt-out payroll savings effective, they are also inclusive. A growing body of evidence shows that managing life without the peace of mind and sense of control that a savings buffer gives takes a real toll, which can be harmful to people’s mental health and their relationships. Supporting people to save builds short-term resilience and long-term security. As the Economic Secretary rightly highlights, financial inclusion can be an engine for productivity and economic growth.”
“We look forward to supporting the new National Coalition of Employers alongside the Money and Pensions Service (MaPS) and The Investing and Saving Alliance (TISA) to scale up workplace savings and help people build lifelong financial security.”
Lou Davey Head of Policy and External Affairs at Independent Governance Group (IGG) comments: “The plan to roll out payroll savings more widely is a welcome step and deploys the very best learnings from the pension industry’s hugely successful auto enrolment, tapping into the inertia of employees. Measures that encourage greater saving across society, to boost financial resilience both in the short term and long term can only be a good thing. Developing stronger savings habits has the potential to help close the retirement inequalities that we see, particularly for women and minority groups that are so often falling behind. Measures must be structured to support saving in the context of modern working patterns, including the disrupted working patterns of those with caring responsibilities.
“Couple payroll savings with the measures to improve financial literacy in primary schools means that we are taking positive steps to building a savings culture that can help people get ahead of some of the biggest challenges that they face, both with having access to short term savings, as well as growing a healthy retirement pot for their future. At IGG we are already supporting financial literacy in schools through our partnership with the Money Ready charity and look forward to exploring new ways to increase our engagement as a result of the new curriculum combined with the financial inclusion strategy.”
Paul Sweeting, President, Institute and Faculty of Actuaries, said:“It is encouraging to see details in the Financial Inclusion Strategy on how the UK Treasury could tackle barriers to individuals’ and households’ ability to access affordable and appropriate financial products and services. We particularly welcome the Government’s commitment to make financial education compulsory in primary schools in England.
“The IFoA has been campaigning on financial inclusion for a number of years. This includes work on the poverty premium in insurance, thought leadership on the cashless society, and our ongoing Great Risk Transfer (GRT) campaign. Our GRT work highlights how, over time, risk has been transferred from large institutions to individuals. As a result, the financial decisions consumers face have increased in both number and complexity, while financial advice is often neither accessible nor affordable. Addressing these very real challenges is a joint effort and will need input from a range of stakeholders, including policymakers, regulators and industry groups, to help find viable, long-term solutions.
“The IFoA recently hosted a roundtable with academics, industry experts, and consumer advocates to consider how to increase financial resilience through a minimum level of insurance protection for all. This has led to a collaboration with Fair4All Finance focusing on practical ways to remedy low levels of household contents insurance coverage among low-income renters.
“We are pleased to see reference to the pilot led by Fair4All Finance in partnership with IFoA members and others “to explore the uptake of contents insurance among social renters in England” to improve financial resilience in insurance.
“We believe this strategy will help to raise the profile of financial inclusion and we will continue to work with the Government and other organisations on practical solutions so that everyone has access to appropriate and affordable financial products and services.”
Carol Knight, CEO of TISA, said: “Access to the basics of financial services is vital for us all. As an organisation that champions the interests of all consumers, we particularly welcome the measures aimed at helping people going through trauma – including domestic abuse, marital breakdown and homelessness – many of whom currently feel cut off from these services in their hour of need. It is also a particular delight to see the moves to incorporate financial education into the national primary curriculum. Financial education is the bedrock on which better consumer outcomes can be built. We further welcome the measures to make it easier for employers to support workers by diverting some of the earnings into savings, reducing the risk of it being swept away in the pressures of everyday budgeting. TISA is delighted to be part of bringing together a national coalition of employers to encourage this move and contribute to delivering a truly inclusive financial system.”
Louise Hill, Founder of GoHenry, said: “After five years of campaigning, two Governments, four Prime Ministers, and a lot of positive noise but no action, today’s news that financial education will finally be added to primary school curriculums in England is music to our ears. It’s what kids, teens and their families have repeatedly told us that they want and it’s crucial to ensuring the next generation receives a meaningful financial education that will help set them up for future success.
“What we need to do now is ensure that it’s not seen as ‘job done’. We need to learn from the fact that just adding financial education to the secondary school curriculum over the last 10 years hasn’t worked well enough. We must ensure that money lessons form a compulsory part of the timetable, teacher training is delivered, expert resources provided, funding made available and that it’s assessed. We’ll one hundred percent take today’s news as a very welcome win, but the hard work starts now.”
Beth Tait, Marketing and Digital Director of OneFamily, a member of the TISA Financial Education Council, said: “Giving young people the tools to understand money from an early age is life-changing - it builds confidence, resilience and the ability to make informed choices. We’re proud to be part of the industry-wide effort that has made this possible and fully support the decision to make financial education a core part of the curriculum. This is an important step towards creating a generation that feels confident and equipped to manage their financial future.”
Sophie Legrand-Green, Head of Policy at TISA, said: “The Financial Education Council, which TISA is proud to convene, has worked collaboratively and consistently to make the case for early and sustained financial learning. Today’s announcement is a testament to that shared effort. We look forward to continuing to support the Council, and to working closely with schools, educators and delivery partners to bring this into classrooms in a meaningful and empowering way.”
Alexandra Loydon, Group Advice Director – Advice Division at St. James’s Place, said: “We warmly welcome the announcement that financial education will take a more prominent role in the National Curriculum. We sadly have enduringly low levels of financial literacy and confidence in the country and this move should play a part to help build financial understanding and resilience. Our own research shows that currently parents see themselves as their children’s main financial influence (58%), remaining far ahead of schools (32%), which are themselves almost on a par with social media (28%). It would be a great benefit to everyone to find new ways to build positive money habits across all ages and for the whole family.
“Part of any financial education programme should be focussed on the importance of saving and investing and how to start building greater financial resilience in our lives. While we are very supportive of this move for education at school age, we should all also recognise the importance of financial education as a life-long journey, using key life moments as opportunities to bolster people’s financial literacy.”
Jennifer Piper, head of the Quilter Foundation, at Quilter: The final curriculum review is a landmark moment for financial education in the UK. For years, we’ve known that money skills are as fundamental as reading and writing, yet the system has struggled to reflect that reality. This review finally recognises that financial education is not a luxury but a necessity.
The findings from the Money & Pensions Service highlighted in the report are sobering. Despite financial education being compulsory in Citizenship since 2014, only a third of children recall learning about money at school. At the same time, 71% of 7–17-year-olds are already making online purchases, and two-thirds do so without adult supervision. These statistics underline the urgency of change, young people are making financial decisions earlier than ever, often without the knowledge to do so confidently. Improving financial education could help with the productivity issue plaguing the country too. The CBI estimates that greater financial literacy could add £7bn to the UK economy and create more than 120,000 jobs every year.
The review’s ambition is encouraging. It calls for financial education to start in primary school, making Citizenship including money skills, a core part of the national curriculum from Key Stage 1 onwards. It proposes a smarter, more integrated approach, where Maths provides the foundations and Citizenship brings those concepts to life in real-world scenarios. It also recognises the need for better resources and sequencing, and for collaboration with employers to embed financial literacy into post-16 education. However, whether it is adopted only time will tell.
Through the Quilter Foundation* and partnerships with organisations such as Money Ready, formerly MyBnk, we’ve long championed the importance of financial education, at Quilter. We know that when young people understand money, they make better choices, feel more confident, and build stronger futures. But policy is only the beginning.
This review is the clearest signal yet that the UK is ready to treat financial education as a core part of children’s education but proof will be in the pudding. If these recommendations are implemented, we can look forward to a generation leaving school with essential financial skills that can make them manage their finances more confidently.
Helen Undy, Chief Executive of the Money and Mental Health Policy Institute and member of the Financial Inclusion Committee, said:
“The Minister has said she wants a strategy that will ‘transform’ financial wellbeing and ‘open up access to financial services’. (3) And it’s very welcome that the new strategy includes support for people with mental health problems as a central theme, which is an important recognition of the enormous impact that mental health problems can have on our money - and of our work on these issues over the last ten years.
“The strategy contains some really welcome commitments on improving the way the travel insurance market works for people with mental health problems, and making services like banking more accessible and safer for people who might struggle to make a phone call, control their spending or understand complex information. We’re delighted that our work in these areas is having such an impact, and look forward to working with government and industry to deliver the change that’s needed.
“But unfortunately, the jury is out on whether the measures announced today will ultimately add up to a ‘transformative’ programme of change for people with mental health problems, because too much of this strategy relies on the goodwill of the financial services industry. History shows that, while this might produce pockets of good practice, leaving the industry to lead delivery - without clear consequences if change doesn’t happen - is unlikely to result in widespread improvements for those who need them most.
“To truly open up access to financial services that work for everyone, the government needs to hold the industry’s feet to the fire in the years ahead and use every lever at its disposal to ensure that the strategy delivers real change for those who are most cut out.”
ENDS
