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Payroll Savings Schemes in Northern Ireland

Evidence type: Evaluation i

Description of the programme

‘Nations of Savers’ is one of the five Agendas for Change that the Money and Pensions Service identified in its UK Strategy for Financial Wellbeing 2020-2030. The goal of Nations of Savers is to increase the number of Squeezed and Struggling working-age adults who are saving regularly by two million, by helping people to build a savings habit. Payroll savings schemes offer one important route to helping to achieve this goal.

Payroll savings schemes facilitate saving by allowing employees to make fully automated regular savings contributions direct from salary via their employer’s payroll system usually via a credit union. Employees only need to sign up to the saving feature once, however sign-up rates nationally (across the UK) appear to be low which highlights key challenges to the success of such schemes.

Such schemes exist across the UK but the particular context of Northern Ireland, where the use of credit unions are typically higher and employment incomes are typically lower, makes opt-in payroll schemes particularly valuable, potentially, in Northern Ireland. A pilot payroll savings scheme launched with two Small and Medium Enterprises (SMEs) employers in Northern Ireland (one in the technology sector with 150 employees, referred to as Employer A, and one in the construction sector with 120 employees, Employer B).

The study

The study is part of a larger programme of payroll savings research commissioned by the Money and Pensions Service (MaPS). This study focussed on the experiences of key stakeholders (credit unions, employees, and employers) of payroll savings schemes in Northern Ireland, shortly following their launch, and sought to address several research questions:

  • What were the employers’ aims and motivation for setting up a payroll savings scheme and what was their experience of setting up and running the scheme?
  • What is the profile of payroll savings users at these companies and their experience and expectations of the product?
  • What is the user experience of signing up and how might this be improved?
  • How do we increase interest and sign-ups for payroll savings within employees?

The study used composite case studies based on in-depth semi-structured qualitative interviews with: the two employers who had launched payroll savings programmes; the two credit unions that offered these employers payroll savings services (one of which served both employers); and 18 employees at both firms (9 of whom who had and 9 who had not signed up to the schemes). The interviews were undertaken in March 2022 and the data were analysed thematically.In addition, a short quantitative survey with 33 employees of one employer (from approximately 100 employees) and data analysis of another short survey of just over 50 employees that had previously been administered by the other employer were conducted to supplement the qualitative findings.

In addition, a short quantitative survey with 33 employees of one employer (from approximately 100 employees) and data analysis of another short survey of just over 50 employees that had previously been administered by the other employer were conducted to supplement the qualitative findings.

Key findings

  • Scheme implementation and take-up: Setting up of the scheme did not appear to be difficult, in the context of facilitated employer-credit union partnerships (facilitated by MaPS The take-up of payroll savings by employees was around 5–10% at both employers within three months of the launch of the schemes. This is high compared with what is known from other schemes in the UK and is likely to reflect higher rates of credit union use and trust in credit unions in Northern Ireland.
  • Scheme design: Users found the ‘set and forget’ nature of payroll savings, the flexibility to modify their contributions if necessary and the ability to access them instantly attractive. The potential for opt-out schemes was welcomed by some employees, although employers tended to feel this would be difficult (practically, legally and ethically) to implement.
  • Facilitators of take-up: Trust and word-of-mouth play an important in boosting take-up of payroll savings. Users and non-users alike suggested that take-up would be higher if incentives were offered.
  • Barriers to take-up: The biggest barrier to take up among those not already saving was concern about being able to afford to save every month. These employees perceived that it would be embarrassing to have to potentially communicate this to their employers.
    • A barrier to non-users was that they did not feel that it was necessary to join payroll savings schemes to increase their savings as they were happy with their existing savings arrangements
    • Some employees were concerned that saving into the scheme might make their salary appear lower and therefore less creditworthy.

Points to consider

  • Methodological strengths/weaknesses: Survey response rates appear to have been comparatively low, therefore the survey results may not be fully representative of all employees at the firms. This is especially important in relation to reported interest in payroll schemes by employees.
  • Generalisability/transferability: The authors note that this was a small-scale study based primarily on qualitative interviews, meaning that causal inferences about specific behavioural outcomes could not be drawn and the findings should not be generalised beyond the sample.
    • The findings may not generalise fully to other geographical contexts, given the role of credit unions and the comparatively high rates of existing credit union use and trust in Northern Ireland, particularly when compared with the rest of the UK.
  • Applicability: The pilot schemes were launched in the context of the Covid-19 pandemic, which might mean that the findings do not apply well at other times.
    • The findings may not apply well to other employers as the authors note that the employers involved in the study were well placed to launch a payroll savings scheme given high levels of employee trust in those organisations.

Key info

Client group
Activities and setting
Implementation of two pilot payroll savings schemes facilitated by the Money and Pensions Service in small and medium enterprises in Northern Ireland.
Year of publication
Northern Ireland
Contact information

Ellie Lugt, Sujatha Krishnan-Barman, Chiara Cappellini, Isabel Power, Cathy Coleman, Johannes Lohmann and Felicity Algate, Behavioural Insights Team