Marvin OnumonuThe Financial Conduct Authority (FCA) has set out clearer rules for workplace savings schemes, aiming to give employers and providers more confidence to set them up.
The FCA worked with partners to clarify how employers can stay within national minimum wage rules and how providers can meet financial promotions requirements.
Recent FCA research found that one in ten people had no cash savings, and another fifth had less than £1,000 set aside.
Workplace savings schemes could help more people put money away regularly, but only 7% of UK employers offered 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, CEO 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.”
Richard Sweetman, senior consultant at 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.”
Sweetman added: “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.”
