Nest has today revealed it is trialling an automatic enrolment savings ‘sidecar’ scheme with SUEZ recycling and recovery UK, a recycling and waste management business.
You can read more details about the trial here: Nest Insight teams up with SUEZ recycling and recovery UK and TransaveUK to launch opt-out payroll savings trial - NEST Insight Unit
Tom Selby, head of retirement policy at AJ Bell, comments: “Automatic enrolment has begun to address chronic undersaving for retirement in the UK, albeit at relatively low contribution levels.
“However, the severe uncertainty brought about by lockdown in 2020 has exposed a long-standing issue facing millions of people – a lack of preparedness for a financial emergency.
“Around 11.5 million people have less than £100 saved for a rainy day, meaning if something goes wrong – be that a boiler or car breaking down, or losing their job – they could be left scrabbling round to make ends meet.
“Many will end up turning to high-cost loan providers or rack up huge debts to pay the bills, running the risk of falling into a destructive debt spiral.
“Sidecar savings vehicles such as this, which divert salary into cash saving automatically rather than requiring someone to make an active choice, have the potential to address this problem.
“Care will need to be taken in ensuring people understand that this is for short-term, emergency savings only, with the aim of a buffer usually to cover between 3- and 6-months’ fixed expenses.
“Building up huge pots of cash saving beyond this would run the risk of suboptimal outcomes, particularly with inflation now rearing its ugly head.”
