Liquidity and workplace pensions

Around the world, policy makers and researchers are launching a range of initiatives designed to encourage, on the one hand, short-term liquid savings, and on the other, illiquid savings for retirement. These two types of initiative are generally undertaken in isolation, implying a tension between liquid versus illiquid savings. The implicit message is that long- versus short-term savings is a zero-sum game, where each type of savings is competing for a fixed share of individuals’ assets.

About the project

More recent work has challenged this perspective. Researchers in the US have 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 is that an appropriate balance of liquidity will enhance people’s overall financial wellbeing, both in the short term and through into retirement.

Towards the end of 2018, we officially launched a research trial to test the impact of a combined savings product, often referred to as the ‘sidecar savings model’, where a liquid ‘emergency savings’ account is linked to an illiquid pension pot. This combined account structure will be delivered in the workplace, with contributions deducted automatically through pay and managed to create an optimal level of liquid savings, while also maximising long-term savings. Over the next two years, we’ll be examining the impact of the savings tool and following workers on their savings journey to measure:
  • how many workers sign up to use the savings tool
  • how much they save in the emergency account; and 
  • the impact on their financial wellbeing.

Watch our video to find out more:

Project partners

The JPMorgan Chase Foundation and the Money Advice Service (MAS) will be providing support for the trial. MAS will also be working with NEST Insight directly on the research, along with Professor Brigitte Madrian of Brigham Young University and Professor David Laibson of Harvard University. The sidecar account will be provided by Salary Finance, working alongside a NEST pension pot.

Further information

You can find out more about the sidecar model and our research trial in the following blogs, press releases and NEST Insight publications:

How will NEST Insight’s sidecar savings trial work? (blog)
NEST Insight launches its sidecar savings trial (press release)
Liquidity and sidecar savings discussion paper (PDF)
Liquidity and retirement savings: what’s the right balance (PDF).

Interested in taking part?

We’re looking for organisations with 1,000+ employees to participate in our sidecar savings trial.
If you’re interested in taking part, and would like to find out more, please visit: or contact Jo Phillips: