Supporting Emergency Saving: Briefing paper 1

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

Description of the programme

In 2018 Nest Insight announced its sidecar savings research programme looking at ways to support emergency saving alongside retirement saving. As part of this programme, Nest Insight and partners are conducting a trial which aims to test the effectiveness and impact of a hybrid workplace savings tool called Jars, which combines short- and long-term savings goals. From January 2021, all participating employers will have implemented the Jars tool. Data will be gathered from that point for two years - this will form the basis of the final programme evaluation.

The study

This report is the first of three planned briefing papers. Emerging insights from setting up the trial include the learning that there are still barriers to uptake of the tool. The Jars pilot has been built within current policy and regulatory frameworks in the UK. This report reviews the benefits and limitations of the current policy and regulatory frameworks, to explore emerging insights about how sidecar and sidecar-like savings approaches could be supported, and what may enable workplace emergency saving in the future, including:

• Using an automatic enrolment mechanism to encourage take-up.
• Building emergency saving into pensions auto enrolment policy.
• Providing financial incentives to save for emergencies.
• Boosting supply capacity to support adoption.
• Optimising the hybrid savings tool design.

The paper is based on the experiences of those involved in setting up the trial.

Key findings

The authors conclude that the following approaches appear promising:

• Allowing, and more clearly encouraging, employer adoption of auto enrolment into sidecar-like tools.
• Building sidecar elements into future evolutions of the UK’s mandatory auto enrolment policy.
• Considering employer- and government-funded models for financial incentives to support take-up and ongoing savings.
• Exploring a role for pension providers, especially master trusts, in supply.
• Considering alternative design approaches to sidecar savings tools to incorporate other savings goals or to better fit the specific needs of subgroups of workers such as self-employed people.

They state that they expect to publish more detailed thinking on these avenues over the coming year as evidence emerges from the savings tool trial.

Points to consider

• Methodological strengths/weaknesses: The report is based on the experiences of those setting up the trial and not on any formal research.
  • The trial is at the beginning, so the learnings are early stage and indicative.
• Generalisability/ transferability: The report is specific to this trial tool and to the regulatory situation in the UK market.
• Relevance: The report deals with an ongoing trial into improving emergency liquid savings, which is highly relevant as these are lacking in a high proportion of UK households.
  • The report is primarily applicable to trial partners, but would also interest 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.