The final installment in our ‘Saving Vehicles’ series of insight article looks at cash/deposit accounts, what is on offer from which providers, and how contributions can be made.
There are two forms of cash (otherwise known as deposit) savings accounts, interest earning and non-interest earning. The difference between the two forms is what you would expect, one pays interest to the member on their savings and the other does not. Simple!
However, both interest and non-interest earning cash accounts are still a rare offering from workplace pension providers.
Our data shows that there are currently only two workplace pension providers who offer their members the option to save into an interest earning cash account. Those are Cushon and Hargreaves Lansdown. Both offer their own product.
When it comes to contributions, only Cushon enables contributions to be made at source via a payroll deduction. As like they tend to do with all other savings options they offer.
Both providers allow the member to make additional payments when wanted via direct contact (call or email instruction) or via the app/portal. Cushon also allows members to make additional payments via bank transfer or via the employer/payroll.
Hargreaves Lansdown also offers members the option of sweeping surplus income into their interest earning cash savings account, but the member cannot chose the frequency.
Currently neither provider offer saving via rounding up or algorithm based/prediction savings.
Only Cushon allows contributions and additional payments to be made by the employer directly into an interest earning cash savings account.
Both Cushon and Hargreaves Lansdown allow the member to apply a contribution holiday to their interest earning cash savings account, giving them the option to stop or pause savings during times of difficulty or during months with abnormally high spending.
Non-interest earning cash savings accounts are also only on offer from one workplace pension provider, but a different one this time.
Fidelity are the only provider to offer their own non-interest earning cash savings solution.
They do not allow for contributions to be made at source via a payroll deduction. However, they do allow members to make additional payments via the app/portal, via direct bank transfer, or via direct contact (call or email instruction).
They also do not allow contributions or additional payments to be made by the employer directly into the non-interest earning cash savings account.
However, members can choose to open one of their non-interest-earning cash savings account are able to apply a contribution holiday. The holiday can give the member the freedom to stop or pause savings during times of difficulty or during months with abnormally high spending.
We are not entirely sure why cash savings accounts are not offered more widely, perhaps your workplace pension provider isn’t the most natural home for such savings? However as we see the increase of micro savings maybe this will change?