Government says payroll savings reach over half a million more workers
Employers including BT, M&S, Veolia and Home Bargains join a payroll savings coalition, and the FCA sets out how opt-in schemes and staff messages should work.
Over half a million more workers will be able to save through payroll at employers including BT, M&S, Veolia and Home Bargains, the government said on Saturday.
The four have joined the government-backed National Coalition of Workplace Savings, whose members agree to offer staff a payroll savings arrangement and encourage them to take part.
Workers can choose a proportion of their salary, which then goes automatically into their own savings pot.
HM Treasury said the savings build up over time and can be accessed at any point without charge.
The figure of over half a million is the government’s own estimate of how many more workers will have the opportunity to save.
Other coalition members include Co-op, SUEZ, Bupa, OCS, Mitie, Greene King, Burger King UK and Travelodge.
Tesco is also working closely with the coalition and has now launched a payroll savings scheme, the government said.
The Financial Conduct Authority describes two main models: opt-in, where employees choose to save via payroll, and opt-out, where they are enrolled automatically but can leave.
The regulator’s guidance for employers focuses on opt-in schemes, and it says it will keep working with government on further ways to build consumer resilience.
In either model, the FCA describes agreed amounts of salary going into a readily accessible cash savings account, and employees can change the amount or stop saving at any point.
Messages that only educate or inform, with no element of persuasion or incitement, are not invitations or inducements under Section 21 of the Financial Services and Markets Act 2000, the FCA said.
If an employer presents information in a way that encourages employees to join a scheme, however, the FCA said it could constitute a financial promotion.
Some employers had asked whether a deposit into a savings account could be treated as a deduction from wages, risking a breach of National Minimum Wage regulations.
On that point, the FCA said employers should avoid schemes where employees incur charges to withdraw their money or move it to a current account.
Savings providers can also receive the information needed for identity checks from employers, their payroll providers or employee benefits companies, the FCA said.
The FCA’s 2024 Financial Lives Survey found that 1 in 10 people have no cash savings, and another 1 in 5 have less than £1,000 they could draw on in an emergency.
Only 7% of UK employers offer workplace savings, according to the Department for Work and Pensions, a figure the FCA cites to show take-up has been limited.
The government said its Financial Inclusion Strategy initiated the coalition, alongside a regulatory statement from the FCA to help employers understand how to offer such schemes safely.
The government said it is working with businesses to develop a factsheet on how savings schemes should operate within National Minimum Wage rules, so employers can offer them with confidence.
