Research trials from Nest Insight have found "compelling evidence" that the widespread use of opt-out payroll approaches can help boost financial resilience, after emergency savings participation rates jump by 50 percentage points compared to opt-in approaches.

Nest Insight first began trialling opt-out approaches to payroll-linked saving with support from the BlackRock Foundation and the Money and Pensions Service in November 2021.

The initial pilot saw employees of Suez Recycling automatically signed up to payroll saving with credit union Transave, unless they opt out, with a similar approach taken in the subsequent two trials with Bupa Care Service and Co-operative Group, and financial wellbeing provider Wagestream.

Following the trial, around 5 in 10 new workers at SUEZ are saving, and 7 in 10 new benefits app users at Co-op and Bupa, when opt-out approaches are used.

Indeed, the opt-out approach was found to dramatically boost saving participation in all three trials, with workers stating they like the scheme (>93 per cent), whether or not they themselves choose to save.

Under the opt-out payroll savings model, employees automatically start saving into their own accessible savings account through regular payroll contributions unless they choose not to.

However, workers are able to make changes to the amount they save, if anything, and quickly withdraw the money if they need it, in order to preserve individual choice while also making it easier for people to get started with short-term saving.

Commenting on the findings, Nest Insight research trials manager, Emma Stockdale, stated: “The results of these trials are extraordinary. Savings participation is dramatically increased by using opt-out approaches, bringing it much more in line with the proportion of employees who say they want and need to save – somewhere between 40 per cent and 70 per cent, depending on the workplace context and provider.

“People are building meaningful savings buffers over time, and they’re actively using their accounts by withdrawing money when they need it. Knowing that they’re saving also gives people greater peace of mind and confidence, supporting financial wellbeing to improve over time.

“The current data from these trials give us no reason to believe other areas of people's finances, including pension saving through auto enrolment, are negatively impacted. The results are really positive. People want to save, and many can save, it sometimes just takes a bit of help to get started.”

Adding to this, Nest Insight director of research and innovation, Jo Phillips, said: “It’s clear from our research that opt-out payroll savings approaches have enormous potential to boost the financial resilience, mental health and productivity of millions of people. We have a huge opportunity here. For the most part these approaches are currently untapped.

“Over the coming months, we’ll be bringing together industry and policymakers to explore how opt-out payroll savings approaches could be scaled.

"We’ll be considering how to increase access to workplace savings solutions, including to employees working for smaller organisations, how opt-out payroll savings approaches could be widely implemented, and whether there’s an opportunity to build emergency savings into the future evolution of pensions auto enrolment in the UK.”

BlackRock Foundation managing director and co-president, Gemma Gooch, also highlighted the report as a roadmap for employers and industry partners to help advance the financial well-being of workers across the UK.

“It is now time for employers across industries to build on the lessons shared in this report and provide emergency savings offerings to their employees at scale,” she continued. “This is good for the individual, good for businesses, and good for society at large.”

Going forward, Nest Insight confirmed that it will continue to collect and analyse data from these trials for up to two years to track whether and how behaviours change over time.

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