NEST is conducting a trial to test the hypothesis that access to a savings product that is more liquid than a retirement account would put those on low to moderate incomes in a healthier financial position to cope with a financial shock. Rather than contributions being made solely to a retirement account, the ‘sidecar savings’ model would allow contributions to be made to a liquid savings account, which would have a pre-determined cap (for example, £1000), after which, any contributions would be routed to the main retirement account.
Whilst this is the requirement from NEST, the ‘sidecar savings’ product that Income Group & Starling take to market does not need to feed into the pension pot but can maintain a growing savings pot. (There is a logical flow that for low-income families, as they near the £1000, they spend the money rather than let it go into a long-term savings pot like a pension).
NEST is looking for a partner organisation(s) to provide the required savings account that can integrate with payroll platforms and process contribution payments. The trial also requires the onboarding process to be online, for easy access to the account (i.e. via app/online) and for the implementation of the ‘rollover’ mechanism mentioned above.
Starling would charge the following:
Income Group Response:
Description of Income Group’s experience in building interfaces with employer payroll platforms and in accepting payroll-deducted contributions
Income Group has recent experience of file mapping with Iris, Star, Cascade, Sage, Payrite, Keypay, Workday and Northgate/Moorepay payroll platforms. Income Group are currently discussing payroll-deducted contributions schemes with some payroll platform providers.
Evidence of Income Group’s ability to deliver a simple - ideally largely online - sign-up process to employees, including all necessary new-customer processes required by regulators.
1. Employees wishing to engage
Company 'A' offer on-line 'sidecar savings' to Employees
2. Company A may predetermine Employers contribution at x% or £s.
Form includes required set up references.
On-boarding Employee completes on-line form, their x% savings contribution
4. Nice to have
Auto-push / Auto-pull
5. Tipping Point Set*
Employee level 'sidecar savings' bank account and Employee references structure
3. Employee Pay Period deductions
Codes set up in Payroll system as a deduction for employees and employers (check NEST References)
6. Tip Or Spend?
TIP = auto tip authorised by Company A
TIP to destination account NEST reference (controls and ceilings)
Employees/Employers deductions on-going, as directed by the employee
Spend = refund via payroll system into Employees bank account
(Balances report back to NEST)*
Flow Diagram Detail
Ref 1 IG Send =
- On line on-boarding configured per company and pre-populated with Employers contributions and reference details as required
Ref 2 IG Send =
- The payment is transferred from the payroll system as an e-report and mapped to ‘one’ NEST sidecar savings account per company where employee references exist
- The payment is transferred from the payroll system as an e-report and mapped to individual employee savings account
Ref 3 IG Send =
in built intelligence to capture the tipping point either set at
- Company level or Individual employee level
- This will trigger the notification to the employee that the limit is about to be reached and a decision is to be made regarding go/no go for tipping to Side Car
- Employee uses the Starling savings account to spend from or when they opt to spend.