Payroll saving behaviours: Learnings from the UK sidecar savings trial

• Description of the programme
• The study
• Key findings
• Points to consider

Description of the programme

Jars is a payroll saving scheme which supports both the shorter-term and retirement savings behaviour of employees. One payroll deduction mechanism is intended to enable the division of money into an accessible saving account which is separate from day-to-day money. Employees sign up to the scheme and set a saving amount and a savings target, then, if they reach their savings target, any excess savings are directed into their workplace pension (in addition to their existing regular pension contributions).

Jars is referred to as a ‘sidecar’ saving scheme as it works alongside the existing workplace pension the employer has in place. It is provided by Salary Finance, with the accessible savings account element provided by Yorkshire Building Society (YBS). Jars is being trialled with employees with five employers in the UK (BT, ITV, StepChange, Timpson and the University of Glasgow), the most recent of which joined the scheme in June 2021.

The study

The Jars trial is intended to build an evidence base for the impact on employees of having access to a sidecar savings tool over the course of several years. This evaluation report documents emerging findings about different savings behaviours amongst users mid-way through the trial. It examines account usage, self-reported financial wellbeing, employee perceptions of the scheme, and how it fits into the broader financial and life contexts of users. It does so using on a mixed-methods approach which draws on several sources of evidence:

• Administrative data: Individual account usage data collected by Salary Finance and aggregated YBS account data.
• Survey data: Ongoing surveys with employees who are offered Jars by their employer.
• Qualitative research: Research interviews with Jars users in the summer of 2020 and in the spring of 2022.

The data include people who had only just opened accounts to those who had been saving into them for two or more years.

Key findings

• Average savings: Mean monthly saving amounts ranged from £66 to £109 by employer.
  • Assuming no withdrawals, these saving rates would allow users to meet their targets within two to three years, though very few had done so within the period of the study.
• Saving patterns: The analysis identified three broad patterns of Jars saving behaviours or ‘use-cases’:
  • The first prioritises budgeting and cashflow management and involves frequent withdrawals of small sum, a fluctuating but steady balance over time.
  • The second prioritises the establishment of a savings buffer and involves periodic withdrawals and a balance which builds over the longer term.
  • The third focusses on building towards a future goals, which can be shorter- or longer-term and involve large withdrawals before a new period of savings accrual.

Points to consider

• Methodological strengths/weaknesses: The authors note that this is early analysis and further details will become available.
  • Although one chart refers to a maximum of 425 accounts, the report is unclear about the numbers of scheme users and the numbers of survey respondents or interview participants (or how these were selected). This makes it difficult to assess the reliability and representativeness of the findings.
• Relevance: The report would be of interest to anyone involved in pension provision, savings product, or in helping increase savings, such as such as government, support agencies, policy makers, policy implementers or regulators.
• Generalisability/transferability: Details are not given about how the qualitative data have been analysed, which makes it difficult to know how sound it is to generalise the use cases to other potential users.
• Applicability: Mention is made of editable ‘default’ saving amounts, but the report does not explore how these may affect saving rates. The study findings may therefore be more or less applicable to other schemes depending on how important default saving amounts are.
  • The foreword notes that take-up of such schemes is low (details are not given), which makes it difficult to interpret how applicable the findings of this trial are likely to be to other schemes.