When we published Balancing today and tomorrow in June, we set out a pragmatic approach to building an emergency savings element into the auto enrolment framework. In that blueprint, we highlighted the tensions that exist between different pension reform objectives, especially the challenge of increasing pension saving while ensuring the system remains accessible and beneficial for lower earners.
Since publication, we’ve had many thoughtful conversations with policymakers, employers, providers and industry experts. Over the coming weeks we will delve deeper into some of the issues and questions that have arisen through those conversations.
In this blog, we address the risk of conflating ‘sidecar’ savings models with early access to pensions models, which we’ve seen in recent discussions around the work of the Pensions Commission.
The ‘sidecar’ has been hijacked – for the sake of inclusion and adequacy, it’s time to claim it back!
In the UK and internationally, the Centre for Inclusive Money at Nest, formerly Nest Insight, is widely associated with ‘sidecar savings’.
It’s something we’ve been working on for several years now and in the early days we used lots of (slightly corny) motorbike and sidecar graphics. We’ve done that less in recent years, but perhaps we should have kept going.
Because recently it’s become clear that the word ‘sidecar’ has been somewhat hijacked. In the past few weeks we’ve heard people use the term to mean wildly different things, many of which are a long way away from the thing we have piloted and researched.
This appropriation isn’t helpful. It risks undermining the real progress we’ve collectively made in building a strong evidence base for a relatively simple policy intervention that could make a massive difference to the financial security of millions of lower earners.
So for clarity, in a period where future pensions policy is being discussed at industry conferences and whilst the Pensions Commission are putting together their final recommendations, we want to set out here what ‘sidecar’ is, why it’s exciting, and what it definitely is not.
What really is sidecar saving, then?
The original sidecar saving idea was first proposed by researchers in the United States.1 The model aimed to preserve retirement saving by putting in place a separate, ‘rainy day’ savings account alongside workplace pensions, to help people better cope with financial shocks in their working life.2
The proposal was inspired in large part by evidence of leakage from the US retirement system, where savers can get early access to their pension savings in a range of situations. For every $1 in savings, 30 to 40 cents leaks out before retirement.3 So the question was, if people were supported to build an emergency savings buffer alongside their pension, would they be more likely to leave their retirement savings ‘locked away’ for the future?
We were the first to take a sidecar solution from the theory into the real world, working with UK employers including BT, Timpson and ITV, employee benefits provider Salary Finance and their savings partner at the time Yorkshire Building Society. We’ve also worked with the academics behind the original concept. But in the UK, because there’s less opportunity for leakage with pensions locked up until you reach age 55, our question was slightly different. If people were supported to build an emergency savings buffer, would they be more likely to save more for retirement once they had that financial resilience in place?
During the trial, employees could open a separate cash savings account alongside their workplace pension, choose how much to save each payday, and set a savings target. If their savings balance hit their savings target at any point, the amount they were saving each pay period would then be moved into the pension instead, on top of their existing regular workplace pension contribution. They could access their cash savings at any point for any reason without penalty. There was no change to the accessibility of their pension. We worked closely to evaluate the pilot with the US academic team who came up with the idea. You can read all about it in our 2025 paper, Workplace sidecar saving in action.
Why is it exciting?
Over the two years of the trial, employees built up cash savings alongside their pension, drawing on them when needed, and building a savings balance when they didn’t. We also saw that the link between the emergency savings account and the pension supported greater retirement saving, with more employees making additional pension contributions at a median level of £100. In short, we saw that sidecar models appealed, and worked very well for those who used them
Since that trial, we’ve explored different workplace savings models that worked even better, collaborating with SUEZ and TransaveUK and then Bupa, Co-op and Stream. In these trials we designed in an opt-out approach to payroll saving. This really helped overcome barriers to getting started with saving and boosted participation dramatically. And again, we saw that having an emergency saving facility alongside the workplace pension was complementary to pension saving. There was no increase in pension opt outs or cessations.4
A key difference in the later opt-out trials was the removal of the automatic rollover into pensions. Our thinking has somewhat moved on from focusing on this direct, hard-wired link, which you can read more about in this recent blog.
Both models strengthened financial resilience, with benefits for employee wellbeing and employers, while greater resilience is also associated with stronger pension saving behaviours.5 We’ve used this learning to develop a proposal for integrating emergency savings into automatic enrolment. Our policy paper, Balancing today and tomorrow, explores how targeted Pensions-Adjacent Emergency Savings Accounts (PAESAs) could support higher retirement saving and the expansion of auto enrolment, while protecting against risks of harm for lower earners.
What sidecar savings is not
Given the work we have done to date, including to show how sidecar models complement the goals of the retirement system, it is frustrating that many are now using ‘sidecar’ to mean something totally different: early access to pension savings for a range of purposes including housing purchase deposits. For example, at a recent event we heard a proposal to “incorporate ‘sidecar access’ for major life events such as first-time property acquisition”.
Early access to pension savings is a more complicated proposal with very different parameters. The amounts needed to support home ownership are vastly larger than the amounts needed for a cash emergency buffer, and if taken out of a pension very much do risk undermining retirement outcomes. While there are some examples of other countries implementing early access models, the evidence base is less developed and there are clearly more risks, including undermining the policy push for more people to reach more adequate pension pots by retirement.
While early access may have merits, accessing your pension in an emergency is fundamentally different from building a separate emergency savings pot alongside it, providing a buffer while leaving retirement savings protected.
That distinction matters. Conflating the two risks dismissing sidecar saving as a threat to pensions when the evidence points in the opposite direction: targeted, pensions-adjacent emergency saving can be low risk and high reward.
Let’s get our sidecar back!
Jo Phillips – Deputy CEO and Director of Impact and Innovation
To find out more about our work on workplace emergency savings, visit:
https://www.inclusivemoney.org.uk/research-projects/workplace-emergency-savings
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1John Beshears, James J. Choi, Mark Iwry, David C. John, David Laibson and Brigitte C. Madrian, ‘Building emergency savings through employer-sponsored rainy-day savings accounts’, Tax Policy and the Economy, vol. 34 (2020), pages 43–90, journals. uchicago.edu/doi/10.1086/708170
2John Beshears, James J. Choi, Christopher Clayton, Christopher Harris, David Laibson and Brigitte C. Madrian, ‘Optimal illiquidity’, National Bureau of Economic Research (NBER) working paper no. 27459 (July 2020), nber.org/papers/w27459
3Robert Argento, Victoria L. Bryant and John Sabelhaus, ‘Early withdrawals from retirement accounts during the great recession’, Contemporary Economic Policy, vol. 3, no. 1 (January 2015), pages 1–16, federalreserve.gov/pubs/ feds/2013/201322/index.html
4Nest Insight (2025), Easier to Save
5For a summary of this evidence see pages 11-14 in Nest Insight (2026) Balancing today and tomorrow