REWARD
‘Harnessing the power of payroll data’…… to support employee saving
Savings? What’s that got to do with payroll professionals?! Payroll send people money, but what those individuals do with it beyond that is up to them. Well, Anna Buckle, head of employee experience and financial well-being, PayCaptain, is here to explain and potentially dispel that myth... B roadly speaking, an individual’s savings levels have a direct correlation with their levels of get much cheerier for at least another 12 months. The latest Citizens Advice Bureau data tells us that the number of people
close that gap, and some people have their own private pensions or have found alternative ways of investing to ensure a sufficient income in later life. Either way, the government is keen to reinforce that the emphasis is on the individual to fund themselves later in life, and not to rely on the government to do it if they want a comfortable lifestyle. So, if saving is such a good thing to do, surely those who can already are? Well, in short, no. There are many behaviours that stop us from doing what we know is in our best interests, especially when it comes to money. For example, individuals tend to be ‘present-biased’ meaning they would prefer to settle for a smaller reward now rather than wait for a larger future reward. Opting out of a workplace pension means foregoing employer contributions and missing out on compound interest, it’s a perfect example of present-bias and growing numbers of people are doing it. I have been working alongside the behavioural insights team to understand this better and we recently published a report of our findings: ‘ Using behavioural insights to improve financial resilience ’. The other key behavioural factors to consider in preventing people from saving include:
financial well-being. Positive financial well-being has a strong link with happy, productive, healthy employees. And I probably don’t need to spell this out, but those employees are better for your business – they’ll create better customer experiences and contribute more to your bottom line. So, savings are pretty important all round. Jo Phillips, director of research and innovation at public-benefit research and innovation centre, Nest Insight has conducted extensive research in this area, and works closely with PayCaptain. Jo said: “We know that people really want and need to have a savings buffer in place. Savings allow people to build financial resilience and cope with unexpected and emergency expenses. Employees with savings are happier and more productive. But millions of people in the UK don’t currently have savings, and this has harmful consequences for individuals, businesses and society. A quarter of UK adults have less than £100 in savings. Almost half of UK households would struggle to cover an unexpected bill of £300.” Ouch. Time for payroll to swoop to the rescue If you feel nervous broaching savings with your employees that’s understandable. The economic outlook isn’t predicted to
whose income isn’t enough to cover their essential outgoings (food, energy, rent) is still growing. Most worryingly, a large proportion of those people are also employed (maybe even by you?). So, it’s important to consider ways to support these employees, but, for the majority, encouraging easy ways to save may just be one of the most positively impactful ways you can help individuals and your business today. When thinking of savings there are two elements to consider: l instant access savings – employees may have a specific goal they’re saving towards (a wedding or a holiday perhaps), or they may just want the peace of mind of knowing they have cash to fall back on in an emergency l longer-term retirement savings – depending on National Insurance contributions (NICs), we may be entitled to some proportion of the state pension when we reach the state pension age. It’s worth noting though, that in recently recorded figures, only 44% were receiving the full state pension amount. Automatic enrolment was introduced in a bid to
“If you feel nervous broaching savings with your employees that’s understandable”
| Professional in Payroll, Pensions and Reward | November 2023 | Issue 95 46
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