Majority of FTSE 100 execs overlook Opperman workplace savings appeal

Speaking at Nest Insight’s Emergency Savings Summit, the minister revealed that he has challenged FTSE 100 executives over their employee savings offerings.

“I wrote to every single chief executive of the FTSE 100 last year to try and say to them, ‘What payroll savings are you doing?’ The answer was that it is pretty limited,” Opperman said, adding that fewer than 50 per cent had replied to him.

“You’d be stunned and amazed by how few are doing it. They will do very lovely things like a double pension contribution, but while it is an amazing thing, it is of zero use whatsoever when you’re in the middle of a pandemic and you’re really short of cash,” he said. 

The bottom line is the Great British public is not great at saving

Guy Opperman, pensions minister

“There are many people out there who haven’t got any savings, and that’s what the government has got to worry about. The bottom line is the Great British public is not great at saving.”

The summit — which saw several speakers from regulators, the savings industry, the business world and stakeholders — found that while there was a demand for such services, they were not always available to employees.

Lessons from auto-enrolment

Auto-enrolment could have the same impact on workplace savings schemes as it did for pensions if employers understand its benefits for their businesses and are given the tools to implement it, according to several speakers at the Nest Insight summit.

Jo Phillips, director of research and innovation at Nest Insight, said auto-enrolment into workplace savings schemes could have a similar impact as auto-enrolment had on pensions.

She said: “We know auto-enrolment made a huge difference in pensions saving, and we think we could use that same mechanism to increase participation for people who want to save for the shorter term.

“We’re not saying we think all employees should have to do this as with pensions regulation, but what if they wanted to? Could they, and how would it work?”

Phillips continued: “We’ve been exploring this question. We’ve explored the regulatory considerations, how you would communicate it, and how you would design it. And we’re currently six months into a trial of an opt-out payroll savings autosave approach working with [recycling and waste management company] SUEZ.”

While the trial results will be shared later this year, Phillips said participation for those who do not actively opt out is more than 40 per cent, and there has been no increase in pension opt-outs.

Open to other kinds of savings

Tim Flacke, executive director at US social impact organisation Commonwealth, said that many people under financial stress might not be aware of the concept of workplace saving.

He said: “There are people who have never been able to save, that suddenly find themselves in this new land with an identity that they had never possessed. [Saving is no longer] something that other people do — people with more money, or more savvy, or those that grew up in a certain background.

“Having that new identity makes you open to other kinds of saving as well.”

Roxana Prisacaru, evaluation manager at the Money and Pensions Service, said encouraging workplace savings was part of its nation of savers pillar that is targeting 2mn people within the “squeezed” and “struggling” segments to start saving regularly, with strong demand among employees for such schemes.

From previous studies, she said parallel savings were effective at helping non-savers become savers, particularly for low-income earners earning less than £20,000-£25,000 a year and younger people.

Several factors can make a difference also, however, with users attracted to auto-enrolment and easy sign-up processes. Furthermore, default saving levels were also crucial when designing payroll saving schemes.

Nevertheless, there were significant barriers to the schemes — many savers were already saving in other products, inertia and concerns around data security.

Katie Duxbury, head of payroll services at Bupa, said employers who develop a greater understanding of their staff and can help them through more difficult times stand to benefit in the long run.

She said: “The more problems that an employer helps a person solve in their life, the more likely that person is going to stay with that employer.

“So, to a certain extent, putting benefits in place creates stickiness and helps that person resolve their life. That person’s knowledge stays in the organisation, that organisation thrives, and the person thrives because that organisation can offer more benefits.”

Duxbury added: “We’ve always got to be in a position because we’re not legally mandated to do these kinds of things, where there is a business imperative to do that.”