Sheffield Credit Union Expands Payroll Deduction Services to More Employers to Help Address Financial Wellbeing

14th May 2021

The expansion is due to a report from February 2021 by the Financial Inclusion Centre, commissioned by the Money and Pensions Service, highlighting the success of payroll deduction schemes in helping people build savings and improve financial resilience.

Payroll deduction services are a simple way for employers to look after the wellbeing of their employees, particularly their financial wellbeing.  The benefits to both employees and employers were confirmed by the report, which was the outcome of a 2 year study carried out with Leeds Credit Union, Leeds City Council and York Teaching Hospitals.

The report found that “Payroll deduction appears to be an effective mechanism for attracting non-savers, and converting them into regular savers.” (Financial Inclusion Centre, 2021).  It also found that being a member of a credit union made employees more likely to build a regular savings habit.  Having a savings cushion can protect individuals in times of financial shock, such as those recently seen through furlough due to Covid19 or increased costs of home working or even job losses.

Payroll deduction services are easy to administer, and free of charge to employers.  They give access to both savings and loans, and even budgeting support through bill-payment accounts, for their employees.  Employers deduct one simple payment that employees have agreed to have deducted and sent to their credit union account.  The employee has confidentiality over whether the payment is for savings, loan repayments or a combination of both.  Credit Unions are unique in that they encourage borrowers to build up savings as they repay a loan, reducing the need for a loan in future times of stress or need.  Sheffield Credit Union has over 17 years’ experience delivering these services, is a safe place to keep funds with protection from the Financial Services Compensation Scheme, is regulated, and benefits from being driven by social aims and values, rather than profit.  As a not-for-profit co-operative, members have a say in how the organisation develops, and staff and directors are committed to empowering individuals to have greater financial resilience and wellbeing.

The recent report concludes that the “study has shown how the deduction of savings at source, and their automatic allocation to a separate account, is an appealing mechanism for saving – and that the ease of this functionality is an important factor for users.” (Financial Inclusion Centre, 2021). To read the full report go to http://inclusioncentre.co.uk/wordpress29/

For more details on starting a scheme for your employees, please email payroll@sheffieldcreditunion.com.