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Payroll Deduction

Payroll deduction into a credit union savings account

This short guide has been written for employers, employees and credit unions to encourage the setting up of direct payroll deductions. It highlights the benefits of payroll deduction into a credit union savings account for employers, employees and for the credit union.

Why should an employer set up a payroll deduction scheme for employees?

Credit unions offer ethical, local investments.

Payroll deductions offer a simple, convenient route to saving.

Credit unions provide independent financial support to your employees.

If employees take out credit union loans, this is a convenient and simple method of repayment.

People who save regularly are better able to cope with any financial distress or unexpected cost.

For minimum cost the employer provides a valued staff benefit which can help recruitment and retention of staff.

Employees can improve their standard of living by accessing affordable loans for things they might otherwise be unable to afford to pay for in advance. As an example, a credit union loan could pay for a holiday, which could reduce the stress levels of an employee and/or reduce the levels of sick leave/staff turnover.

Credit unions foster a responsible attitude towards credit, assisting with some of the welfare aspects of being a caring employer.

Employees who are members of a credit union will be more likely to see the benefits of membership and inform others.

Increasing the customer base of local credit unions will make them more sustainable, so promoting them to your employees is a form of corporate social responsibility.

How to set up a payroll deduction system

For Employers

1.  Find your local credit union(s) using the Mersey Money directory.

2.  Decide whether to offer payroll deduction for all the credit unions your employees are eligible to join, or just the main one

3.  Talk to the one(s) you have decided to work with

4.  Agree how you are going to set up the system

5.  The payroll deduction set-up is simple, it works just like any other payroll deductions scheme you currently run:

          a) set up an authorisation process
          b) deduct payments
          c) provide monthly listing to the credit union
          d) pay money over

6.  Then other than promoting it to both existing and new staff on a regular basis, the credit union will run the agreed authorisation process for you.

Why should an employee join a credit union and use their payroll deduction scheme?

For Employees

Credit unions offer ethical investments

Money invested in a credit union benefits the local community, not shareholders

You can save as little or as much as you want on a regular basis

Saving money regularly helps protect you from unexpected financial pressures and helps you manage your money more effectively

Payroll deductions are a convenient and easy way to save

Because the payment is deducted before your money goes into your bank, you don?t feel the impact, but you get the benefits of saving

If you need to borrow money, credit unions offer low-cost loans to members

How to arrange a payroll deduction scheme through your employer

  1. Find your local credit union using the Mersey Money directory and join the credit union

 2.  Ask your employer if they offer payroll deductions ? if not, show them a copy of this page!

Remember that even if your employer does not offer this service, you can still join Central Liverpool Credit Union and save regularly, then contact your bank to set up a regular Standing Order to pay money straight into your savings account.

Find Us here:
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Central Liverpool Credit Union Tel: 0151 708 5515 Email: enquiries@centralliverpoolcu.co.uk Web: http://www.centralcu.co.uk/
Central Liverpool Credit Union is authorised by the Prudential Regulation Authority & regulated by the Financial Conduct Authority & the Prudential Regulation Authority. FSA FRN: 213251