Cushon and University of Lincoln launch automatic savings option for those excluded from pensions
Cushon, the fintech workplace pension and savings provider, and the University of Lincoln have successfully launched an alternative savings option for young people excluded from pensions auto-enrolment, helping many who are saving for the first time to build up a healthy savings pot – with one student employee able to save £5,000 over the academic year. Less than one in ten (8%) opted out of the scheme – a very similar level to pensions opt out rates.
The current economic climate has demonstrated that a significant part of the UK population isn’t able to cope with financial shocks. Our research shows only a quarter of people (24%) feel positive about their financial future, with people much more likely to feel concerned or anxious. Meanwhile, more than half (54%) say the rising cost of living means they are unable to save as they want to.
10.6 million contributing pension members show that a key way to get people saving via the workplace is to automatically enrol them, and yet pensions auto-enrolment does not capture everyone – including under 22s and those who do not meet the minimum earnings threshold, both of which apply to many student workers. The initiative between the University of Lincoln and Cushon aims to provide an alternative form of saving for this underserved group.
Student employees working for the university are auto enrolled (through their contract of employment) into a savings pot, provided by Cushon, from where they can choose to move to an individual savings account (ISA) of their choice. The scheme defaults them to a 3% of salary contribution, with the university contributing 6% but they can choose to pay in more and in return the university will also increase their contribution up to a maximum of 8%. Students also have the option to opt-out, and, if they do meet the auto-enrolment threshold, they can be switched automatically to the university’s pension scheme.
In the first academic year, a total of 1,012 students were automatically enrolled in the scheme, with an 8% opt-out rate in line with average UK pensions opt-out rate.
According to a survey of the student employees, nearly half (46%) were saving for the first time and nearly half (42%) said they now feel more positive about their finances. Engagement is high with around four in ten using the Cushon app to check on savings every week, with six in ten also saying the experience improved their thoughts and feelings surrounding campus jobs.
Steve Watson, Director of Policy & Research at Cushon said: “We must ensure that everyone in society is set up for a secure financial future. Working with University of Lincoln, we have been helping achieve this by contractually enrolling working students into a workplace savings scheme with great success.
“Just like a pension, they have the choice to opt-out and if their circumstances change and they do ever meet the pensions auto enrolment regulations, they can be easily switched over into the pension scheme.
“Despite it still being early days, the initial results are extremely positive, with opt out rates in line with pension auto-enrolment levels. And we’re hoping this will really set the tone for getting young people engaged financially for the rest of their lives.”
Ian Hodson, Head of Reward/Deputy Director of HR at University of Lincoln said: “We’ve been working hard so that our students can find savings vehicles relevant for them to engage with.
“We genuinely believe that the work we’ve being doing with Cushon could change the way in which young workers and society in general view saving.
“In the current climate this initiative has been crucial in helping our young workers build up a savings pot. It’s important that we don’t let the momentum drop and we will continue to teach our student workers about the importance of saving for future financial resilience.”
The initiative has already been received positively across the industry, winning Employee Benefits’ Best Pensions Strategy award.
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