The Financial Conduct Authority (FCA) has reported this morning that it is providing clarity around workplace savings schemes so employers and savings providers can offer them with greater confidence.
The FCA’s statement is as follows:
To help more employees benefit, the FCA has worked with partners to provide clarity on the rules around schemes. This includes setting out how employers can avoid breaching National Minimum Wage requirements and explaining how providers can meet financial promotions requirements.
Savings are essential to help consumers manage their financial lives. But the latest Financial Lives Survey found that 1 in 10 people have no cash savings, and another fifth have less than £1000 put aside for a rainy day.
Workplace savings schemes could help millions of consumers to start saving regularly and build financial resilience, but only 7% of UK employers offer them.
Emad Aladhal, director of retail banking at the FCA said:
“Financial inclusion is a shared effort, which is why we’re teaming up with partners and playing our part to help businesses understand how to apply the rules for the benefit of consumers.
“This clarity should give employers greater confidence to offer savings schemes that can help people navigate their financial lives”.
Emma Reynolds, economic secretary to the Treasury said:
“Payroll savings schemes are a great way for everyday workers to put a little aside for a rainy day – this statement helps businesses support their employees to make good financial decisions.
“I look forward to publishing the Financial Inclusion Strategy later this year where we will build on this important work.”
Oliver Morley, chief executive at the Money and Pensions Service said:
“As shown by research we recently carried out with Nest Insight on opt-in and opt-out workplace savings, even a small amount set aside can provide financial resilience and peace of mind for employees.
“We will continue to support the FCA in engaging with government and industry to raise the profile of these schemes with employers.”
Also sharing his reaction to the news, Richard Sweetman, Senior Consultant at leading independent financial services and employee benefits consultancy Broadstone, said: “The UK suffers from significantly low levels of savings with millions of people holding little or no cash reserves to protect against financial shocks and provide longer-term financial security.
“Workplace savings schemes can play a vital role, complementing auto-enrolled pension programmes, to help employees improve their financial wellbeing.
“The FCA’s clarity around these schemes and ongoing collaboration with industry stakeholders to promote workplace savings is an important step. We hope to see more employers explore workplace savings plans to encourage regular saving from their employees.
“This can ultimately help reduce money worries by building financial resilience, leading to happier, more engaged and more productive employees in the workplace.”
