Nest Insight has launched its sidecar savings trial, with Timpson named as the first employer to pilot the savings model from the start of 2019.
The retailer will trial the saving method across its 5,600 workers for two years, in which time sign-up rates, how much they save and the impact on their financial well-being will all be assessed.
The trail will look to create an “optimal level of savings”, after research by the Money Advice Service (MAS) found that just 44 per cent of the UK’s working population have £500 or more in liquid savings for emergencies, while 26 per cent have nothing.
MAS strategic lead on budgeting and saving, Michael Royce, said: “Many millions of adults who are ‘financially squeezed’ or ‘financially struggling’ lack a savings buffer to help them cope if they were to face an unexpected bill. All too often, these costs can lead to financial difficulty.
“We hope that it builds on emerging evidence that workplace savings initiatives can be an effective means of helping people enhance their financial resilience throughout their working lives both for the short-to-medium term and for when they move into retirement.”
Under the sidecar model, contributions paid into the combined account structure would be distributed between a emergency savings account and a pension pot. Once the emergency account reaches the ‘savings cap’, all contributions will then start ‘rolling’ into the pension pot.
The saver can then withdraw funds from the emergency account, meaning future contributions would again be split until the savings cap was reached.
Timpson chief executive, James Timpson, said: “Financial wellbeing is an important part of this. We know that money worries can have a really negative impact on colleagues’ health, happiness, and productivity at work.
"We’re delighted to be taking part in Nest Insight’s sidecar savings trial to help our employees become more financially resilient, both today and into their retirement.”
The government has also earmarked the savings model for the self-employed, which it said is a more attractive proposition than auto-enrolment or than having “open early access to pensions”.
Nest said that it could be a potential solution for the self-employed, but warned that it would not work for all groups.
JP Morgan and MAS will provide support for the trial, while the sidecar account will be provided by Salary Finance.
Salary Finance CEO and co-founder Asesh Sarkar, said: “The product has the potential to address a significant problem in society - the lack of emergency savings employees have - and we are excited to see the impact it has, working with progressive and caring employers like Timpson."