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06 Jun 2022
by Steve Watson

How to build younger workers’ financial resilience during the cost of living crisis

Even if they’re not eligible for auto enrolment into a pension scheme, a workplace savings scheme can set them for life

How to help younger workers save for the future during the cost of living crisis.jpg 1


Getting to grips with money has to be one of the most important life skills we can give children and yet it’s still not generally part of the normal school curriculum. Nearly one in three people were not taught about things like savings and pension in school, according to Cushon research (May 2021).

So a lot of us enter the world of work and bill-paying without knowing the basics. If the pandemic and the current cost of living crisis has shown us anything, it’s that this needs to change. We have to get people more financially resilient and the earlier we start educating them about money, the better. Good financial habits formed when we are young are more likely to stick.

A good way to illustrate how to approach this in the workplaces is via a real-life case study – a project we have been working on with Lincoln University. We like to call it Education in Action as it’s very much a practical project with real positive financial outcomes for real young people.

It’s a great example of how to get young people comfortable with money and setting them up to be able to cope with financial challenges, like the cost of living crisis.

Tell me and I forget, teach me and I may remember, involve me and I learn…

Like most universities, Lincoln University has a cohort of students who hold down jobs on the campus. While not studying, they’re regular employees carrying out a job of work and earning money.

This in itself is an education opportunity. They get paid, receive a pay slip, maybe pay tax and national insurance, need to budget and settle bills. It’s a step into the world of money before they graduate. It’s a great practical learning experience.

But how about getting to grips with saving?

From a remuneration point of view, the only difference between these young people and full-time employees is that they aren’t members of the university pension scheme as they don’t meet the auto enrolment criteria.

But, being a progressive employer, the University didn’t want them to go without valuable and generous employer pension contributions or to lose out on one of the most important money lessons there is – how to save.

So, together we challenged the status quo and, in effect, auto enrolled the students (using what’s called contractual enrolment) into workplace savings. Just like a pension, they have the choice to opt-out and if they do ever meet the pension’s auto enrolment regulations, they switch over into pension. It’s still early days, but the initial results show how getting young people engaged with saving can really set the ‘money’ tone for the rest of their lives.

These two stats say it all:

• Opt-out rate:  Less than 10% (very similar to UK pension opt-out rates)

• Percentage of savers choosing their own investments:  82% (much higher than the current UK rate where most remain in the default fund)

For every young person I meet, I learn an idea

This project has been a learning experience for us too. Not only are we learning the ‘language of youth’ so that we can reach all young people easier with communications, but it’s leap-frogged into a solution to a problem that a lot of companies face – what do you do about people who fall outside of the auto enrolment regulations? – swap pensions for workplace savings.

That way all employees are saving, they just happen to be saving into different products. But they’re all getting into that important habit of saving and they’re not losing out (through no fault of their own) on valuable employer contributions.

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In partnership with Cushon

Cushon is an online savings&investments platform provider, offering holistic workplace savings.

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