What Is a Payroll Saving Scheme?

11 September 2026

We all know that saving money is a good idea.


The tricky part is finding something left over at the end of the month to actually save. 

A payroll saving scheme makes saving easier by allowing you to save directly from your MOD salary. 


Instead of waiting until the end of the month to see what's left, you choose how much you'd like to save, and it is automatically deducted from your pay and put into your savings account. 


How does payroll saving work? 

The process is straightforward: 


You choose how much to save → the amount is deducted from your salary → your employer passes it to the savings provider → your savings build up over time. 


You don't need to remember to make a transfer each month, and even a small amount can add up over time. 


For example: 


Saving £50 a month would give you £600 over a year. 


After 5 years of saving, you'd have £3,000. 


That's before any interest or dividend that may apply to your savings. 


For serving personnel, having money put aside automatically can be particularly useful when your circumstances change, whether that's a new posting, moving home, transitioning to civilian life, or simply planning something you want to do in the future. 


Your savings could help you build an emergency fund, save for a holiday, prepare for a larger expense or simply give you more breathing room when something unexpected comes along. 


It can support financial wellbeing too 

Payroll saving isn't just about building up money. It can also support financial wellbeing. 


Money worries can take up a lot of headspace. Having a financial cushion can make unexpected expenses feel a little less daunting and give you another option when something doesn't go to plan. 


If savings aren't enough to cover it, there's also an option to borrow when you need to and repay through the same payroll process. 


Knowing there's savings there if you need them can be one less thing to worry about. 


How do I join a payroll saving scheme? 

If you’re ready to start saving from salary, the MOD has partnered with credit unions to give active personnel the option to save from salary. 


You can sign up with First Defence Finance, a military credit union for active personnel, veterans, and their families, to start growing your savings automatically from salary.

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