Co-op CEO Shirine Khoury-Haq and Manchester metro mayor Andy Burnham

Helping your employees to start saving money could transform their lives – so Co-op boss Shirine Khoury-Haq and Manchester metro mayor Andy Burnham joined up to encourage bosses to think of new ways to support their colleagues.

Many people in the UK workforce are struggling to put money aside for rainy days, as the cost of living crisis has continued to hit hard. That leaves them vulnerable to financial shocks and means their mental health can suffer as they worry about their debts and their finances.

Now employers are being urged to support their workers by launching opt-out saving schemes to help people get their savings pots started.

While auto-enrolment for pensions has become the norm, most workplace savings schemes are opt-in. But the Co-op and other employers including Bupa have been trialling auto-enrol schemes where their staff are signed up to savings schemes automatically until they choose to opt out, meaning small amounts are taken out of every pay packet and put into instant access savings accounts.

They say the schemes have been a hit with staff. And the Co-op’s CEO Ms Khoury-Haq said that if more companies introduced such measures, it could have an “immediate and direct impact on the financial resilience of thousands of individuals employed in Greater Manchester and the North West ”.

She spoke at a Talk Money Week event at the Co-Op’s Manchester headquarters, organised with financial innovation centre Nest Insight which is working to promote financial security in the UK.

Ms Khoury-Haq said: “The experience of our Co-op in offering a workplace savings scheme has been hugely positive for us as an employer and also for our co-op colleagues.”

The Co-op CEO said the Co-op regularly surveyed its 55,000 colleagues, and had found that one-off expenses can pose “significant financial difficulty” for those without savings and who have “little or no give.”

Those team members, she said, “have told us that starting to save is a huge challenge for them”. So instead the Co-op has worked with Nest Insight to launch an opt-out savings scheme. Of those auto-enrolled, 7/10 have continued saving.

Ms Khoury-Haq said: “The default solution for colleagues is to start saving small amounts unless they actively say they don’t want to.” And she added: "We think this approach could be as transformative as the intro of auto enrolment for pensions.”

And she added: “Now that we know the approach works we’re really keen to encourage other employers to do the same”.

Encouraging savings could, she said, support anti-poverty strategies across the region. And she said that helping people start saving is a “simple yet effective measure that employers have the power to make happen”. Ms Khoury-Haq said the Government should promote auto-enrolment in savings schemes.

Mayor Burnham smiled that in Talk Money Week, he had “had the ultimate talk money conversation” just the same morning, as Chancellor Rachel Reeves had been in town. He smiled: “We need more (money) in Greater Manchester. It pretty much went like that.”

The mayor pointed to the most recent GM Residents' Survey, in which 51% of people said they would be unable to afford an immediate but essential expense of £850.

He said that lack of savings hit people’s mental health, and their ability to work and even sleep. And he said the rise in the number of families in temporary accommodation over the past decade was a sign of the financial struggles so many people were facing.

The mayor added that often “you take it for granted that you live your life with savings behind you. But what happens if you don’t?” He welcomed the Co-op’s pilot auto-save scheme, and said he wanted to help people in the region to move beyond the debt “dragging them down”.

The first panel discussion saw representatives from businesses who have implemented auto-saving share their insights with sector leaders.

Alex Henley, wellbeing consultant at Co-op, said the number of colleagues with savings had grown since the scheme was introduced, and said colleagues wanted their employer to help them get started

He said: “The really important thing is just how empowering this is for colleagues… it does give them security and dignity. It restores people’s sense of self-worth and gives them confidence.”

Katie Duxbury, head of pay and reward services at Bupa, said her business had implemented an auto-save scheme after seeing low-take up on two earlier voluntary savings schemes. She said it had felt like the right thing to implement after colleagues reported being put under pressure by the cost of living crisis – and said staff had welcomed the scheme.

Katie smiled: “Nobody ever rings payroll on payday to say thank you”. But after their savings scheme was introduced, the team did get a call from a colleague saying thanks because they now had savings for the first time.

And she said the scheme meant some colleagues were now able to do more shifts, because they had the financial cushion to be able to pay for their travel to work. Asked about implementing the scheme, she said: “It’s really easy to switch this on.”

Roger Shelton, CCO at Sheffield credit union Transave UK, is working with 60 employers on savings schemes and is helping people who have never saved properly before – including one person who just had some cash in a box under the bed.

He said auto-savings schemes could encourage people who were putting off saving to make a real start. He said: “It’s like the gym – we mean to do it but don’t necessarily do it.”

Jo Phillips, director of research and innovation at Nest Insight, talked about the impacts of people’s financial struggles on their work and on their mental health. She said saving is too often seen as being about financial education, but that it’s not a knowledge gap that’s the issue - people know they need to save, but can’t.

Auto-enrolment in savings schemes, she said, is one solution. She added: “It’s not about removing choice…all we’re doing is making it easier for people to start saving. We’ve flipped the default.”

Jo said that at the Co-op, the auto-enrolment scheme had seen the number of colleagues saving regularly rise from 10% to well over half. And she said feedback had been positive: “We see people talking about control and empowerment”.

The second panel discussed how encouraging saving could help the people of Greater Manchester.

Ian MacArthur, director of the GM Good Employment Charter, said that in the 2010s when employers talked about health and wellbeing they “probably meant a fruit bowl and a yoga class”. But since the pandemic employers had become more aware of the need to support their teams’ mental and financial health.

Looking at auto-enrolment in saving, he said employers could look to work with local credit unions rather than global banks.

And he concluded: “My selling point is this – it’s going to cost you nothing and you’re going to give your employees something, something potentially valuable. This is an absolute gift. Use it.”

Rose Marley, CEO of Co-operatives UK, said co-ops were one of the North’s biggest global success stories – but sometimes little known in the UK. She talked about supporting employees with saving and said “This is an innovation opportunity for all forms of business”.

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