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Saving & Loans Workplace Savings Scheme FAQs




If you want to know more about our Workplace Savings Scheme, please contact Nikki Plummer our Business Development Manager on 07984 449255 and she'll be happy to help.

These FAQs are designed to act as a guide for employers, accountants & payroll professionals considering offering credit union deductions through payroll to employees.


GENERAL QUESTIONS

What is a Credit Union?

Credit unions are a not-for-profit co-operative run by members for the benefit of members. They offer savings and access to loans.

How do we know, as an employer, that the credit union we are intending to partner with, is the most suitable for us?

From a systems perspective, we would recommend that the credit union meets the minimum data requirements:

1.Ask for a copy of their annual (FSA) return

2.Check with any credit union trade association

3.Consider one of your employees applying to be a director of the credit union if you are a sizeable employer and would want to ensure good governance

The CIPP are devising a governance questionnaire you could send out to the credit union as part of your due diligence.


How would the company know it was a genuine credit union deduction?

Each employer would sign up with a particular credit union and this would need to be confirmed by the employer to their payroll service provider.

If I encourage employees to save through payroll is that giving them financial advice?

No, you are merely presenting a logical argument for them to do something. You are not advising them what to do.

If we partner with one credit union and offer only this one as the option for saving through payroll is this financial advice?

No. You are offering a credit union arrangement as an employee benefit. As with any benefit you signpost the availability of it and what it means in practice but the employee makes the decision.

If the credit union we partner with fails is there any liability on us?

No, you would have pointed out to your employees that they are covered up to £85,000.


HR & PAYROLL

How can payroll help?
Offer a credit union facility in your workplace, or if you are a payroll service provider agree to administer on behalf of your customer without charge, just like payroll giving.

If an employee leaves and they have a credit union loan, is the employer liable for re-payments?
No, the contractual arrangement is between the credit union and the employee. You are only the conduit.

If an employee finds that an alternative credit union can offer better rates could they have any recourse on the employer?
No. This is much the same as engaging in a pension scheme. You facilitate the arrangement and signpost employees but at no stage do you advise your employees to engage with the preferred supplier.

Will there be fluctuating balances?
There might be, but this will not be a concern for the employer as the credit union would advise the deduction amount and when to stop.

Will payroll be required to process refunds?
No. Any monies will be paid and/or refunded directly by the credit union.

Payroll frequencies i.e. what happens if it is weekly?
It would be deducted from each pay period (weekly); however an agreement could be made with the credit union to pay all contributions monthly, whichever works best for your business.

There is speculation that credit unions would require payment into their account on or before payday? This is not practical for payroll due to potential adjustments etc.
The payment date would be agreed between the employer/service provider and the credit union. Many payroll professionals would expect to be given time to pay by the 19th of the following month. It is important to recognise that until the payment is received from the employer, the saver’s account will not reflect any of the monies deducted.

What about part months or payment in advance etc?
The schedule would take account of full month/weekly etc. deductions only and where an individual starts part way through a month, it would be expected to start the following month/week etc. Where a person leaves part way through the month, it is expected no deduction would be taken but instead the employee would be flagged as a leaver.

How would we receive instructions to deduct or stop payments?
The credit union would advise the employer when to start and when to stop, along with any adjustments by means of the schedule.

Can the schedule be electronic?
Yes, the employer/service provider can work with the credit union to receive and send a file electronically that could be uplifted directly into the payroll, subject to payroll software ability.

How does the employer notify the credit union of a leaver?
This information would be provided via the payment schedule.

Can we pay credit unions via BACs?
Yes.

Could I be accused of unlawful deduction from wages?
No an agreement would be signed between the credit union and the employee; similar to the trade union subscriptions and payroll giving. A schedule would be provided by the credit union each pay period.

We believe that this guide is accurate and reliable but we would recommend that an employer who has decided to engage with a credit union, to provide payroll deductions, should obtain any legal advice they deem appropriate if they require further clarity on any point raised in this document.

You can download these FAQs here: Click to DownloadDownload Workplace Savings FAQs for employers & payroll professionals (259.5kb)

You can also download the Employers Handbook here: Click to DownloadDownload Payroll scheme Employers Handbook (708.4kb)

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  • East Sussex Credit Union
  • Tel: 0300 303 3188
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  • Web: http://www.eastsussexcu.org.uk
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Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority