Liquidity and workplace pensions: sidecar savings trial

Around the world, industry, policymakers and researchers have launched a range of initiatives designed to encourage, on the one hand, short-term liquid savings, and on the other, illiquid savings for retirement. While beneficial, these goals have often been pursued through separate initiatives, each focused on either emergency resilience or pension adequacy. This separation often creates an implicit tension: liquid and illiquid savings are treated as if they are in competition, with one reducing the capacity for the other. The result is a perception that short‑term versus long‑term saving is a zero‑sum choice, where each pound saved for emergencies is a pound not saved for retirement, and vice versa.

The sidecar model tested by Nest Insight aimed to reduce this tension by integrating the two, allowing individuals to build financial resilience today while still accumulating meaningful pension savings for the future. Following the successful pilots between 2019 and 2022, the sidecar concept has gained traction in policy debates. Several UK think tanks, including the Resolution Foundation and the Lifetime Savings Initiative, have highlighted hybrid emergency‑and‑retirement saving models as a potential next step in the evolution of automatic enrolment. Internationally, similar ideas have begun to appear in retirement policy discussions, most notably in the United States, where policymakers and employers have explored linked emergency savings accounts alongside workplace retirement plans as part of SECURE 2.0.

About the project

Researchers in the US proposed an approach that combines liquid and illiquid savings in a way that’s optimised around the needs and preferences of the saver. The argument was that an appropriate balance of liquidity will enhance people’s overall financial wellbeing, both in the short term and through into retirement.

In July 2019 we officially launched a UK research trial to test the impact of such a combined savings tool, often referred to as the ‘sidecar savings model’, where a liquid ‘emergency savings’ account is linked to a traditional defined contribution pension pot. This hybrid savings tool was offered by participating employers in the workplace. Contributions were deducted automatically through payroll and managed to create an optimal level of liquid emergency savings, while also increasing long-term savings.

The trial was supported by The BlackRock Foundation, the Money and Pensions Service (MaPS) and JPMorgan Chase. The research was led by Nest Insight, working in collaboration with academics Sarah Holmes Berk, John Beshears, James Choi, Jay Garg, and David Laibson, as well as MaPS. Salary Finance was the trial’s savings technology partner, providing the savings tool – branded ‘Jars’ – which was introduced in participating workplaces. Jars allowed employees to set up regular payroll contributions to save money into their emergency savings account, provided by Yorkshire Building Society (YBS), and, when they reached their savings target, further contributions were automatically channelled into their workplace pension. The sidecar savings tool was piloted in five diverse large UK workplaces: BT, ITV, StepChange, Timpson and the University of Glasgow, providing valuable evidence on how integrated savings models can support financial resilience and long‑term retirement outcomes.

Our research

Research objectives

Over the course of the trial, we examined the impact of the savings tool and followed workers on their savings journey to measure:

  • Who signs up to use the savings tool? What levels of participation do we see? Does it attract new savers?
  • How do people use the savings tool? How much do they save? How often and why do they withdraw money from their emergency savings? And does it help them to save more for retirement?
  • Does the savings tool have a positive impact on workers’ financial resilience and wellbeing?

Research methodology

The pilot research brought together different methodologies to address the research questions comprehensively including:

  • Analysis of administrative data – account data collected by Salary Finance and YBS allowed us to look at account usage and saving behaviours including deposits, balances and withdrawals over time.
  • Regular employee and comparison group surveys – measuring self-reported financial wellbeing and responses to the Jars proposition.
  • Qualitative research with employees – research interviews allowed us to gain a deeper understanding of questions like how Jars fits into the wider financial and life contexts of users, and how Jars might best be communicated to build awareness and engagement.
  • Qualitative research with employers and other stakeholders – exploring implementation considerations and questions like why employers might choose to offer or not offer Jars.

Key findings

The research trial found that the idea of sidecar savings has a high appeal among employees, particularly those with lower financial security. Employees who signed up have built a new savings habit and a growing proportion of these savers have seen their payroll saving amount roll over into a potentially meaningful extra contribution to their workplace pension.

  • 44% of surveyed employees eligible for Jars say they think the savings tool would help them.
  • £375 median emergency savings balance at 12 months.
  • 91% of Jars accounts still active after 18 months.
  • 85% of Jars users making a payroll contribution at 18 months.
  • 6 in 10 Jars users made at least one withdrawal in the first year of having a Jars account.
  • 5% of Jars users are making additional pension contributions via Jars after 18 months.
  • £100 median monthly additional pension contribution made via Jars.
  • Employees say that saving with Jars gives them greater peace of mind and confidence with money.

Despite the success, sign up rates were low with fewer than 1% of eligible employees signing up to the accounts despite almost half saying they thought it would help them. This intention-action gap, which is not uncommon with payroll saving products, means that payroll saving doesn’t always reach the people who want and need it. To address this, Nest Insight has been exploring whether opt‑out payroll saving, where employees automatically start saving into an accessible account unless they say they don’t want to, could provide a more effective route for those who want to build a savings buffer.