All employers should offer payroll deduction schemes to allow employees to pay into credit unions, according to a new report published yesterday.
The Scottish Government’s Credit Union Working Group report – Scotland’s Credit Unions: Investing in Our Future – sets out measures to help increase the use of credit unions in Scotland, and encourage more people to save and borrow responsibly. Payroll deduction schemes enable workers to automatically transfer money into credit union savings accounts each month, and participate in long-term saving.
The report was launched by Business Minister Fergus Ewing at the Edinburgh headquarters of Lothian Buses, which already has 36 per cent of its employees signed up to a credit union through a payroll deduction scheme.
First Minister Nicola Sturgeon has also written a letter to employers across Scotland urging them to sign up to credit union payroll deduction schemes, which can be used by credit unions to help get employers on board.
There are currently more than 100 credit unions in Scotland, with a combined membership of more than 375,000. Six per cent of the population are enrolled in a credit union, compared to only 1.3 per cent in England, and 2 per cent in Wales.
Mr Ewing said:
“Credit union membership enables people at every income level access to financial services at more affordable levels than many of the high street banks.
“Payroll deduction schemes can help employees to participate in long-term saving, and I would urge those businesses not already associated with a credit union to consider this free employee benefit. It not only helps their employees, but also helps Scottish families to take control of their finances.”
The report also highlights the need to improve financial education for young people, including looking at partnering with schools to promote junior saver schemes being run by credit unions, and teaching aspects of numeracy in a real life context.
Mr Ewing added:
“In addition, it is important that we look at financial education for young people, and by working in partnership with schools, credit unions can help to raise awareness in this area.
“We want to see the credit union sector continue to grow and thrive, and by implementing the recommendations in this report, it is hoped that Scotland will prove to be an enabling environment for credit unions.”
Lothian Buses Chairman Jim McFarlane said:
“Lothian Buses has operated a payroll savings scheme for over 35 years with nearly 36 per cent of our employees making use of the scheme.
“Our Capital Credit Union plan allows our employees to save as much or as little as they want each week or month before their salary is paid. We find the payroll deductions easy to manage and we are pleased that we can offer this as an added benefit to our staff.”
Lothian Buses employee Nicola Wylie said:
“I have been saving with the Credit Union for many, many years and have also taken out a couple of loans. It so easy to save with the money coming straight from my wages and the interest rates on loans are low. It’s a real bonus.”
Capital Credit Union CEO Marlene Shiels said:
“Capital Credit Union is delighted to have been part of the Working Group created by the Scottish Government to encourage credit union membership, which provide important benefits for both organisations and individuals, particularly in terms of supporting the financial health and well-being of employees.
“Lothian Buses, a commendable example, have had a payroll deduction scheme with Capital Credit Union for over 20 years. Almost 36 per cent of employees are members of our credit union, saving and repaying borrowings in a simple, convenient manner, direct from payroll, before their salaries hit their bank accounts.
“We are excited and enthusiastic about the Scottish Government’s significant support for credit unions, both by offering staff across the country access to Capital Credit Union’s membership and also by supporting the belief that credit unions play a vital part in Scotland’s future, working with all employers, big and small. Everyone working together builds a stronger local economy, a healthier population and a more vibrant and prosperous community. After all, “People helping people” is what the credit union movement is all about.”