🔔 NEST is to trial a new savings account to run alongside its successful pension scheme

The NEST pension scheme is a pension auto enrolment initiative that was set up by the Government to make sure that all employees have access to a company pension scheme.

Launched in 2012, NEST now has over 7 million members who regularly contribute into a pension – and benefit from a contribution from their employer too, which is great news.

Off the back of this success, NEST has this week announced a new initiative – the sidecar savings trial.

The success of the NEST pension scheme means that many more people are building a savings pot for their retirement. But according to figures from the Money Advice Service, only 44% of the UK’s working population have savings of £500 or more – and 26% have nothing at all.

The sidecar savings trial is designed to help employees to save not only for retirement but also to build up a pot of rainy-day funds – which will come in handy to pay for any so-called financial shocks that might occur, such as fixing the car if it breaks down.

Having this rainy-day fund could help to avoid the need for borrowing from family and friends, or even worse, taking out an expensive pay-day loan.

How will it work?

Contributions over and above the auto enrolment minimum would be automatically deducted from the employee’s salary and initially split between their pension pot and an easy access account.

Once a predetermined balance has been achieved in the easy access account, the contributions would all revert into the pension pot. If the saver dips into their easy access account, the contribution will be split again until the balance has been built back up.

As it is a trial at this stage, only certain companies will initially be offering the sidecar savings initiative and the interest rate that will be applied to the account is yet to be announced.

The first employer that is due to roll out the trial to their 5,600 employees in the next couple of months is Timpson. And although this is likely to once again be an initiative that you need to opt out of, as there will be auto enrolment, those who sign up will be monitored for the next two years to assess whether the model can improve workers’ financial wellbeing.

It looks like a good concept, but why wait for the initiative to reach you?

You can use the same principle yourself and save money into an easy access savings account as soon as you are paid. You can usually even set up a standing order, so that the payment becomes like another bill – but one that you can dip into when needed.

And if you don’t think you need regular easy access, you could earn more interest by choosing a regular savings account.

This means you have the pick of the whole market and can make full use of competitive savings accounts right now. For help finding the most suitable accounts for your circumstances, call us free on 0800 011 9705, we’d love to hear from you.

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