Credit Unions offer benefits to employees and employers

At a time when the financial pressures on families are accentuated more than ever due to the pandemic, the value of payroll savings and loan schemes, to both employees and employers, has never been greater. Sean Lynch, Chief Executive of Citysave Credit Union explains...

The pandemic has shone a light on the financial fragility of some families and highlighted the need for all of us to have fast recourse to either savings or fair-priced finance from a reliable source.

Research from 2019 shows 11.5m million adults in the UK have less than £100 saved. Unexpected life events, without savings or access to a fair loan provider, can make such adults vulnerable to very high-cost payday lenders and even loan sharks. But employers can help employee wellbeing, and keep them away from the sharks, by adding a simple payroll deduction scheme to their employee benefits.

In 2019 the Money and Pensions Service (MaPS) funded research on how workplace payroll savings and loan schemes can help people improve their financial wellbeing. The initial findings from the study suggest that those who save with a Credit Union through payroll are directly benefiting from such schemes:

•  More than three quarters (78%) of people who save with a credit union through payroll deductions are far more likely to save regularly compared to just over half (55%) of non-payroll savers who are with a credit union, and just under half of staff (47%) who are not members of a credit union at all

•  Almost all payroll savers (96%) would recommend this type of scheme to their co-workers, and said ease and simplicity of this type of saving (79%) is the biggest draw

•  Almost two thirds (62%) of people not already saving via payroll deductions were unaware that they could save in this way

The research also looked at the financial wellbeing of staff at two employers and revealed the financial struggles facing workforces:

•  Half of workers (50%) agreed that their financial situation makes them anxious

•  More than a third (37%) agreed that money worries had affected their health (physical and mental wellbeing) over the
past year

•  31% agreed that money worries affected their family relationships over the past year

•  18% agreed that money worries had affected their work over the past year

Michael Royce, Senior Policy and Propositions Manager at the Money and Pensions Service said: “An increasing number of
employers are recognising the need to address money worries amongst their workforces, with research showing 22% noted that
productivity was reduced due to money-related stress.

"We hope these trials bring to light the important role employers have to play in improving the financial wellbeing of their staff and
will move them to offer similar payroll saving schemes.”

In Warwickshire, Warwickshire County Council and two District Councils have taken the lead have introduced payroll schemes for
their staff with Citysave Credit Union.

Credit unions

Credit unions are an alternative to high street banks and building societies. A credit union is a financial co-operative run by its
members for the benefit of its members.All Warwickshire County Council staff are now eligible to join the Citysave credit union. Credit unions provide an easy, hassle free way to save or borrow, and members have the option to have and deductions taken direct from net pay. Member savings do not attract interest but as a co-operative any profit at the end of each year is given back to members in the form of a dividend on
savings. Citysave has paid a dividend of 0.25% on instant access savings for each of the last three years.

Who are Citysave?

Citysave Credit Union was initially registered in 1988 to provide easily accessible savings and borrowing facilities to Birmingham
municipal workers. Today, Citysave provides savings and loans to over 7,000 members from the wider Midlands community and
manages over £9m of local savings. Savings are fully protected by the Financial Services Compensation Scheme.

How can employers get involved to help their staff access this benefit?

Please visit https://www.citysave.org.uk/employee-benefits/ and view a short testimonial video and FAQs. Please get involved and
feel free to give me a call! Sean Lynch, 07787431350 / sean.lynch@citysave.org.uk