Jeff PrestridgeNov 28 2018

Embrace sidecar savings

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Embrace sidecar savings
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There are few retailers these days that press all my proverbial buttons. I am not big into formulaic High Street chains, and would rather watch paint dry than spend an afternoon shopping in Westfield Stratford City, close to my home. Even more so as Christmas approaches as fast as a Japanese bullet train.

If I am feeling naughty on a Friday morning, before I go into work, I will pop into Miller of Kensington (in London) and ask the kindly butcher to cut me a chunky loin of lamb.

He opens his doors early, always gives me a discount and provides service with a smile, an art slowly disappearing from our High Street.

He is obviously a shrewd businessman because he has just opened a cafe (Fait Maison) opposite. He keeps imploring me to give it a go, but I have not quite got round to tasting its coffee and pain au raisins (deadlines and all that). But I will.

Unlike many other companies, it gives former prisoners a chance to get back into working life by employing them in its stores.

The Garden Basket, a greengrocer a few doors down from Miller, is also a personal favourite. Whatever my needs – sprigs of rosemary for the lamb – the owner meets them, even if it means him rooting around in the room at the back of the store before he finds what I am after.

Apart from these two gems, I like Boots because of its Advantage card, and also Ramila, who works on the perfumery counter and is prone to giving me free samples of Sauvage whenever I top up with Fahrenheit eau de toilette spray. I also like the shop next to my flat where I buy newspapers at the weekend and the odd pint of whole milk. “How are you Mr Jeff?” is the usual greeting. “Knackered”, is the standard response.

Timpson’s business ethos

But my favourite retailer by far is shoe repairer Timpson. Not just because it has rescued many of my well-trodden shoes from the proverbial knacker’s yard. Or as a result of cutting spare keys for me in a hurry when my sons have suddenly wanted to decamp in my flat for a prolonged period of time.

It is all to do with its business ethos, set by founder and chairman Sir John Timpson and carried on by his son James, chief executive.

Unlike many other companies, it gives former prisoners a chance to get back into working life by employing them in its stores. Some 10 per cent of the workforce are ex-convicts, although Timpson likes to refer to them as ‘foundation colleagues’. 

The retailer also runs academies in three jails where prisoners can learn the trade. A refreshing and bold approach, which other employers should follow.

Given Timpson’s pioneering approach to employees, it is no surprise to learn that it is now leading the way in a project designed to encourage people on below-average earnings to save for a rainy day.

The work is being overseen by the National Employment Savings Trust, set up originally to ensure every employer can offer a pension scheme under the new auto-enrolment regime.

The project is called ‘sidecar’ savings and is designed to chip away at the 26 per cent of the working age population who have no savings whatsoever to draw upon in a financial emergency – while increasing the percentage of workers (currently 42 per cent) who have more than £500 squirrelled away.

The scheme works by diverting a chunk of a worker’s pay every month into a hybrid savings account – part long-term pension, part interest-bearing deposit account. 

While the pension element cannot be accessed until age 55, the employer can withdraw money from the cash account whenever needs must. When money in the savings account hits a predetermined sum, all monthly contributions get diverted into the pension until such time that the worker draws down on their savings. Then the monthly contribution gets divided again.

Embracing the savings habit

The objective is to get workers into the habit of saving so that when a financial emergency arises (or a “shock” as Nest describes it), they have some funds set aside to meet it. Rather than often is the case now where a worker faced with a financial shock resorts to turning off the pension contribution cap, or borrowing money on a credit card or from a payday lender.

I do hope sidecar savings is a big success and that other employers embrace it. I think it could encourage a lot of workers to take up the savings habit. 

Sometimes, all people need in order to do the right financial thing is a hefty nudge. Launched six years ago, auto-enrolment has forcibly nudged 8m people into pension saving for the first time – or encouraged them to save more than they used to.

I am sure if sidecar savings became mainstream it would have a similar dramatic impact on the number of workers putting money aside for a rainy day.

Certainly, if my employer launched such a scheme, I would jump in with two feet – of course, wearing shoes repaired by those good men and women who work for Timpson.

Jeff Prestridge is personal finance editor of the Mail on Sunday