New scheme could help employees kick-start a savings habit

Employees could find it easier to start a savings habit and build up their "rainy day" funds due to a new initiative from a building society.

Yorkshire Building Society said people will be able to choose a regular amount of money to save and have the deposits taken directly from their post-tax salary.

The funds will be put into an easy access savings account paying 0.75% interest.

The society said doing this allows savings to be kept separate from day-to-day spending.

But savers can still withdraw their money at any time, without penalty, if it is needed. They can also vary the amount they save each month.

Yorkshire Building Society has teamed up with Salary Finance, which provides employee benefit technology, for the initiative.

The society said the initiative is open to employers in general.

It said employers need to join the scheme for their staff to take part - but workers can register their interest and then an approach will be made to the company.

Care home provider Allied Healthcare will be the first company to offer the product, Yorkshire Building Society said.

James Drewry, reward manager at Allied Healthcare, said: "Colleagues have made it clear through survey feedback and written requests that they wanted more support with saving for long or short-term financial goals."

Saga, another Salary Finance client, will also be launching the savings product.

Yorkshire Building Society chief executive Mike Regnier said: "Starting, and keeping up, a regular savings habit is a big driver of financial well-being, especially for those that don't have any form of meaningful savings already.

"Saving a small amount directly out of salary on a regular basis is a simple way to achieve this, as money is moved into savings before it reaches a bank account and could get caught up in everyday spending."

Asesh Sarkar, chief executive of Salary Finance, said: "This new savings product creates a great opportunity for employers to have a significant positive impact in the lives of their employees by increasing their financial confidence."

Baroness Altmann, a former pensions minister, welcomed the scheme as an "exciting new initiative" which would help employers address the issues faced by savers, such as the risks of unexpected costs putting savers in financial difficulty.

Rachel Springall, a finance expert at Moneyfacts.co.uk, said that while people may think of putting money into a pension differently from siphoning cash off into a savings account, "the action to save should be the same".

She said: "Consumers should be thinking about their long-term aspirations and not just retirement.

"There is no telling when someone may need a little cash to survive any chance in circumstances, so it's better to save and be safe than sorry."