On 5th July 2017, Nest Insight introduced some savings enthusiasts to the concept of sidecar savings. I wrote about it enthusiastically. The idea was that Nest would trial this idea and then introduce it. Simple.
Well maybe not quite so simple. The concept went into the pilot stage with Timpsons, University of Glasgow, StepChange and, in the past few months , BT putting it on the benefits menu.
So yesterday was the big reveal, how had it gone down? Is there a proof of concept? What has voluntary take-up been like? We had hoped for some insights but instead we got a load of blather about the potential for achieving financial well-being but no numbers. The closest to an insight was an unguarded remark from one of the panel of employers , the idea was more “popular in principle than in practice”.
Reading the supporting report “Supporting emergency saving – early learnings from the employer experience – I had to wade through eight pages of preamble before getting to the 11 learnings from 18 45 minute interviews with employers. The result a conclusion
There is interest and appetite for
developing hybrid savings tools which
can be offered by employers as part
of a financial wellbeing benefits
package. The early learnings from Jars
point to ways to optimise sidecar
savings for employers.
Frankly after 30 months, we do not seem to have come a long way.
Somewhere along the line, the Sidecar has been rebranded “Jars“. Why “Jars” is not clear but it would provide me with jokey headlines, if I felt that its concept would be proved. But I see no evidence that this is likely to happen unless..
unless by some act of
parliament extremely clever benefit consultancy, Jars can get unjammed and become a benefit you have to opt-out of. The idea of opt-outs is to make those who are financially incompetent vulnerable, solvent by opting them in to saving into Jars. Unless, someone gets wind they can raid their jar before it is full up it will be lost forever invested into the workplace pension of their employer’s choice (unless it is a net pay or salary sacrifice scheme – where Jars doesn’t work).
Frankly, the chances of Jars becoming part of the auto-enrolment opt-out is somewhere between Bob and no-hope. Jars is not a pension scheme so doesn’t fall under the Pensions Act 2008, it is a non-tax advantaged savings scheme which becomes a one off payment into a pension or else is spent on whatever the saver chooses to reward him or herself with (including mending the washing machine). I mention washing machines because one panelist mentioned being able to mend the washing machine as a life-changing event on the call – I am not sure if this comment was made in jest. Most people for whom washing machines are too expensive to mend use a launderette.
Has anyone stopped to consider docking the wages of someone on minimum wages so that they can have a savings account with Yorkshire Bank? How does this not contravene minimum wage legislation, how does this impact means tested benefits and what has this to do with freedom and choice. This is, as Charlotte Clarke once told me, the best way of introducing an increase in the auto-enrolment rate via the back door. As if we were so dumb.
Hard to get enthusiastic
Despite all the noise, precious few people appear to have used Jams so far. We can guess this by the unavailability of any information on take up after two years of trialing. One employer mentioned that there was limited bandwidth for employee communications during the pandemic but as this initiative is supposed to be improving financial resilience, that sounded a bit lame – a bit like MaPS parking dashboard development in April.
There was no evidence of any workplace pension – other than Nest – being involved in this project and the financial services companies which were pushing the concept either had skin in the delivery (Yorkshire Bank, Salary Finance) or are asset managers with an eye on the multi-billion pound mandates on offer from Nest itself (Invesco, BlackRock and JP Morgan). MaPS is of course also a supporter – quango to quango. This is hardly the white heat of innovation.
What is needed where innovation is happening is resolution and dynamism, what appears to have happened with the Sidecar is a visit to the FCA’s innovation hub and a lot of conversations with HR people about financial well-being. This low-key mood music was picked up by Pensions Expert that characterized the report and webinar as “Employers giving cautious backing to… the project”.
It is hard to get enthusiastic about this. We need some firm information on how the project is going and we were told we would need to wait till next year for that. Right now we can feel assured that Jars is keeping a lot of people very busy, let’s hope that the well meaning people among the sponsors of all this, can report something more concrete , when next Jars talks to the world.