Expert view: What the FCA guidance on payroll savings schemes means for employers 

August’s guidance on payroll savings schemes from the FCA is a clear opportunity for employers. It provides clarity and clear guidance to employers on facilitating workplace savings schemes, removing uncertainty and making it easier to act. 

Research from Nest Insight, the public-benefit research and innovation centre set up by Nest, reminds us that millions of households in the UK can't cover unexpected expenses.

That kind of financial fragility doesn’t stay at home, it shows up at work, and can affect morale, focus, and retention. It disproportionately affects those from underrepresented groups, lower-income backgrounds, and those in non-traditional working patterns.

Successful implementation depends on bold leadership from employers, policymakers, and industry groups. Together we can build a system that puts financial inclusion at the forefront, offering practical support to employers which will be genuinely transformative.

How the FCA guidance sweeps away barriers to employer-led saving schemes

In my years working with employers, I’ve heard the same questions come up time and time again. The new FCA guidance has provided answers to many of these.
Do employers need FCA authorisation to offer payroll savings?

One important clarification is that businesses do not need FCA authorisation to run a payroll savings scheme, provided contributions go directly from payroll into the chosen regulated provider.

Can lower-paid workers participate without breaching National Minimum Wage (NMW) rules?

Concerns around pay also often arise. Importantly, payroll savings do not reduce “pay” for NMW purposes, as long as the money goes into the employee’s own account and remains accessible. 

This means that even staff earning close to the NMW can choose to save. Employers should, however, remain mindful of this when communicating with lower-paid workers to ensure clarity and avoid confusion.

What can employers say about the scheme without crossing regulatory lines?

This is another area where the FCA has provided reassurance. Employers are free to share information about how a scheme works, but persuasive or promotional messaging must be issued or approved or provided by the savings provider.

In practice, this empowers employers to play a much more supportive role in explaining the mechanics of payroll savings, such as “you can choose to divert part of your wages into a savings account”. However, employers should avoid language that could be seen as recommending or endorsing a particular product. 

Is onboarding going to be a hassle for employees?

Onboarding processes can also be simplified. The responsibility for identity checks sits with the savings provider, but they can usually rely on payroll or HR data employers already hold, reducing the need for employees to upload identification documents separately. 

Do Consumer Duty obligations apply to employers?

Another common question is whether Consumer Duty obligations apply. Here again, the answer is reassuring, responsibility lies with the savings provider, not the employer. Employers can support their people without taking on new regulatory responsibilities.

Can employers automatically enrol staff into savings schemes?

The conversation about opt-out payroll saving models is gaining momentum. Nest Insight has run highly successful real-world trials with Bupa, the Co-op and Suez, in which employees started saving a default amount automatically unless they made changes to the setting or chose not to save. 

In these pilots, participation rose from a low baseline when employees had to sign up to save, to up to seven in 10 employees beginning to save, many of whom lacked financial confidence and had not managed to save before. 

Although it is possible for other employers to replicate these pilots, legislative change is likely to be needed to make it more straightforward for opt-out approaches to scale. Employers can still play a vital role in advocating for more inclusive approaches and piloting schemes that demonstrate their value.

Who benefits and who risks being left behind?

The FCA’s recent guidance represents an opportunity for UK employers to support their workforces and strengthen organisational resilience. But let’s be clear. These changes are not a silver bullet for solving the financial exclusion gap.

Financial exclusion is a daily reality for millions of people and employers can play a key role in building financial peace of mind. They can pilot inclusive schemes, advocate for reform, and use the FCA’s guidance to remove barriers.