Description of the programme
One of the National Goals set out in the Money and Pensions Service’s UK Strategy for Financial Wellbeing 2020-2030 is to encourage two million more people to save regularly by 2030. Many people would like help to save from their employer and payroll savings products are a potential way to do this and support the wider financial wellbeing of employees. The link with payroll means that savers need only authorise the feature once and pay is subsequently diverted to the saving account with each payroll cycle. However, employee take-up of these schemes is often low.
The Level payroll savings product is a proprietary scheme offered to employers as a staff benefit by Level Financial Technology (Level). The saving account carries competitive interest rates, and it is part of Level’s financial wellbeing digital platform. Among other employers, it is offered by Capita, which is a large consulting, digital services and software company in the commercial sector with over 34,000 employees. In a precursor phase to the study described here, one of Capita’s divisions (comprising about 4,000 Capita employees) was involved in a pilot launch of the payroll savings scheme in April 2021.
The study
The study was a collaboration between the Behavioural Insights Team, the Money and Pensions Service (MaPS), Capita and Level Financial Technology to understand the best ways to encourage take-up of the payroll savings scheme, who signed up, why, how they used the account, and early impacts on their savings and financial wellbeing.
The study involved redesigning emails that were sent to Capita employees to encourage them to sign up for the Level payroll savings product. Conducted in 2020 to 2022, the study used mixed methods across several phases:
- A literature review to develop four email variants.
- A pilot with about 4,000 of Capita’s employees, initial interviews, user testing with 22 Capita employees (users and non- users) and interviews with four key stakeholders to select and refine two email variants and other product features.
- A three-group randomised controlled trial (RCT) with 30,000 Capita employees to test and identify the optimal email variants.
- Analysis of Level’s administrative data.
- Surveys with 87 Level users at sign-up and 43 seven months later.
- Interviews with 15 users six months after sign-up.
Key findings
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Design of optimal emails: Four email messages were initially designed for testing in the pilot: gain frame, which highlighted peace of mind; soft default, which highlighted the ease of payroll saving; sign up later, which highlighted the option to save now or later to overcome perceptions of lack of affordability now; future self, which emphasised the lifestyle benefits of saving.
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Selection of optimal emails, product redesign and launch: Pilot testing identified gain frame and soft default as the better options. These, and a control condition (standard promotional message), were selected for launch and testing. The product was redesigned to allow savers to start saving next month rather than immediately and to increase the default saving amount to £50. A financial incentive (a £5 bonus) and prize draw (chance to win £1,000) were announced via email by Capita six days after launch.
The study reports differences in take-up rates and user interest where they are statistically significant at the p<.05 level of significance.
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Take-up of the payroll savings scheme: Compared with the control group (0.2%), sign-up rates were significantly higher in the soft default condition (0.7%) but not the gain frame condition (0.3%). The financial incentive and/or prize draw increased sign-up.
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Interest in the product: The email was opened by 43% of recipients of the ‘soft default’ message, 41% of ‘gain framing’ recipients and 38% of control group recipients. One (or both) of two links to further information were clicked on by significantly more soft default message recipients (5.4%) and gain frame recipients (2.9%) than control group recipients (2.3%).
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Saving and withdrawal rates: 60% of users (those who signed-up the saving scheme) saved the default rate of £50 or less and 25% withdrew at least some of their money between June and August 2021.
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User profiles: Two distinct user groups were identified: lower-income users with little to no prior savings, who were attracted by building a pot of savings; and higher income users with prior savings who were primarily attracted by the interest rates.
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Product design: Users valued having savings separate from their main spending account and automated deposits into their saving accounts.
Points to consider
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Methodological strengths/weaknesses: The reporting of survey measures is based on small (and in some cases highly attriting) sample numbers. Any differences that are described in the report based on the survey findings are unlikely to be statistically significant and should be treated with caution. The findings that are based on the RCT design (such as take-up rates and user engagement) are nonetheless robust.
- While the study evidences statistically significant improvements in product take-up as a result of intervention, take-up rates are nonetheless low and the practical significance of the findings is not considered in any detail.
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Generalisability/ transferability: Being based on small and highly self-selecting samples, the survey results may not be generalisable to all users.
- The secondary inclusion of monetary incentives, after launch, will tend to reduce the generalisability of the results of the intervention (i.e. the email wording) on its own to other payroll schemes. In other words, it will have affected outcomes across all three test conditions and may therefore show artificially high impact.
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Relevance: This report is relevant to those with an interest in savings and saving schemes, particularly payroll savings schemes.
