Co-op Expands Opt-Out Savings Scheme to Strengthen Financial Wellbeing for Colleagues
13 November 2024
- Co-op’s opt-out savings scheme aims to help thousands of colleagues build financial resilience, focusing on frontline colleagues.
- Developed following a trial with Nest Insight, the scheme has proven transformative, with 70% of trial colleagues actively saving to support their financial wellbeing.
- Co-op urges other businesses and the government to help employees to start saving.
Co-op has announced the expansion of its innovative opt-out savings scheme, designed to help colleagues build financial resilience by automatically setting aside a portion of their wages.
Developed following a successful trial with public-benefit research and innovation centre Nest Insight, this opt-out savings approach has already delivered significant results, with 70% of colleagues on the trial actively saving. This is particularly impactful given that four in ten Co-op colleagues in its food business reported having less than £100 in savings, underscoring the pressing need for accessible savings options.
The opt-out savings scheme is set to grow, with Co-op planning to extend access to thousands more colleagues over the coming months, with a focus on frontline employees who may face financial uncertainty. On average, colleagues participating in the scheme have saved £100 after four months and £200 after eight months, demonstrating the scheme’s effectiveness in helping colleagues build financial security over time.
This initiative reinforces Co-op’s commitment to tackling socioeconomic barriers that impact financial resilience and mobility, further supporting its goal of creating a fairer and more inclusive workplace. Co-op’s approach also aligns with the Greater Manchester Anti-Poverty Strategy, complementing the city’s efforts to promote financial security and social mobility across the region.
Co-op is encouraging other UK employers to explore similar approaches to workplace savings and is calling on the government to help employees to start saving. Co-op believes this approach could be transformative for financial resilience across the UK, much like the impact of auto-enrolment for pensions, with potential benefits that extend to improved productivity and economic growth.
Co-op’s opt-out scheme automatically enrols colleagues to save a default amount each month unless they choose not to participate, allowing them to build a financial buffer without having to take additional action. Colleagues can access their savings at any time without fees or penalties, making this approach flexible and supportive of unexpected financial needs.
Claire Costello, Chief People and Inclusion Officer at Co-op, said:
“Our colleagues told us they needed help to start saving, especially for the unexpected, and autosave has proven to be a simple but powerful way to offer that support. We’re preparing to make this scheme available to thousands more colleagues as we continue to roll it out, because we’ve seen the difference it makes in helping people feel secure, confident, and in control of their finances. I’d encourage other employers to consider how this type of support could work for them too – together, we can make a positive, long-term impact on financial resilience and wellbeing.
“By making colleague financial wellbeing a core priority, we’re also taking action on social mobility, a crucial ambition for Co-op and one that’s central to our vision. As employers, we have a vital role to play in creating a workplace that empowers growth, and I’m proud that Co-op is leading on this.”
Mayor of Greater Manchester, Andy Burnham, said:
"Due to the cost of living crisis, too many people across our city-region are facing financial worries and anxieties about covering life's essentials. Our latest research has found that over half of residents wouldn’t be able to afford an unexpected but necessary expense of £850. These pressures take a serious toll on people’s mental health and wellbeing, and it's important that we all do whatever we can to address them.
“This new approach from the Co-op and Nest Insight can help make saving feel manageable, and bring a real sense of security and peace of mind. It's a simple but effective scheme that helps to build financial resilience, and I would encourage employers everywhere to look at introducing similar measures to help support people through what is still a tough time.”
Jo Phillips, Nest Insight’s Director of Research and Innovation, comments:
“It’s great to see Co-op acting on the huge potential to improve financial resilience, mental health and productivity for its valued colleagues. The trials and research we’ve done with Co-op and other employers have shown that an opt-out approach to workplace savings is a game-changer – extremely effective in inclusively supporting low- and moderate-income workers to build greater financial security and peace of mind. Nest Insight is looking at how to make sure nobody is left behind as more employers choose this approach and as policy-makers think about how to make it easier for more people to get started with saving via their workplace.”
The announcement follows an event hosted by Nest Insight at Co-op’s Manchester Head Office this month, where Co-op CEO, Shirine Khoury-Haq, and the Mayor of Greater Manchester, Andy Burnham, joined local leaders to discuss the role of workplace savings in addressing poverty and building financial resilience.
The concept of auto-enrolment for workplace savings is still in its infancy, although its effectiveness and popularity is well evidenced and Co-op is calling for government and regulator support to make opt-out savings schemes easier for employers to adopt as a core component of good employment. In January 2024, Labour committed to removing legislative and regulatory barriers to wider adoption of opt-out savings approaches in its Financial Services Review but has yet to set out further detail.
Co-op’s partnership with Nest Insight, including its successful trials of opt-out workplace savings, has shown that opt-out savings schemes can provide an effective boost to financial wellbeing, with evidence-based support from academic partners at Harvard and Yale Universities. This step highlights Co-op’s dedication to advancing fair employment practices and supporting its communities through meaningful action.
ENDS
Notes to Editors: Co-op’s opt-out savings scheme automatically enrols colleagues into an emergency savings fund, offering accessible financial support that can be used as needed. The opt-out structure allows colleagues to save without needing to take action, with options to withdraw their savings at any time without fees or restrictions. Details of the scheme include: - £40 is the default saving amount, which can be changed at any time by the employee; - Savings are instant access; - There are no fees or charges for saving and no restrictions or penalties for withdrawals; - Colleagues receive an annual 5% boost to their savings paid monthly, similar to interest; - More than 9 in 10 colleagues who have experienced opt-out savings are supportive of the scheme. - The expansion of this scheme builds on Co-op’s commitment to social mobility and its proactive efforts to address socioeconomic challenges within the organisation.
About Co-op
Co-op Group is one of the world’s largest consumer co-operatives, with interests across food retail, funerals, insurance, and legal services. Co-op is owned by and run for its 5.5 million members. With over 2,300 food stores and more than 800 funeral homes, Co-op also supplies products to 6,000 other outlets, including those run by independent co-operatives, through its wholesale business, Nisa Retail Limited.
Employing 55,000 people, Co-op has an annual turnover of over £11 billion and is a recognised leader in social goals and community-led programmes. Co-op exists to meet members’ needs and champion the causes they believe in.
About Nest Insight
Nest Insight is a public-benefit research and innovation centre. Our mission is to find ways to support people to be financially secure, both today and into retirement. We conduct rigorous, cutting-edge research, working collaboratively with industry and academic partners to understand the financial challenges facing low- and moderate-income households. We use these data-driven insights to identify and test practical, real-world solutions. Our findings are shared widely and freely so that people around the world can benefit from our work. For more information, visit nestinsight.org.uk