Employer-based short-term savings accounts

Sarah Holmes Berk, John Beshears, Jay Garg, James J. Choi, David Laibson, Sarah Holmes Berk, John Beshears, Jay Garg, Sarah Holmes Berk, John Beshears, Jay Garg, James J. Choi and David Laibson

Chapter Chapter 21 in The Elgar Companion to Consumer Behaviour and the Sustainable Development Goals, 2025, pp 359-386 from Edward Elgar Publishing

Abstract: We study the introduction of a choice architecture design intended to increase short-term savings among employees at five firms in the United Kingdom. Employees were offered the opportunity to opt into a payroll deduction program that auto-deposits funds from each paycheck into a short-term savings account from which withdrawals are possible at any time. We find that employees who opted into the program kept using it. Among employees whose accounts were created early enough to be observed over the first 12 months after their account activation and who did not separate from employment during this period, 96 percent still had a balance greater than £1 and 87 percent received an automatic payroll contribution in month 12. However, product take-up was very low: no more than 0.7 percent of eligible employees ever activated an account. Opt-in access to short-term savings programs does not elicit widespread participation.

Keywords: Financial well-being; Emergency savings; Rainy day savings; Savings buffer; Employee benefits; Payroll deduction (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035325054
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