You know that sinking feeling when you check your account balance and realise you’ve somehow spent the money you meant to put aside for savings? Or the mild panic when your loan payment is due tomorrow and you’re not sure there’s enough left in your account?
If either of those sound familiar, salary deduction could change everything. It takes money for savings or loan repayments straight from your wages before it even hits your bank account. You can’t spend what you never see, and you’ll never miss a payment again.
How it actually works
When you set up salary deduction, your employer takes agreed amounts from your pay and sends them directly to your London Mutual account. It happens automatically every time you get paid – just like tax or National Insurance.
The money shows up on your payslip as a deduction. If you’re saving, it goes straight into your savings account. If you’ve got a loan with us, it covers your monthly payment. Simple as that – no standing orders to set up, no dates to remember, no wondering if you’ve got enough money in your current account.
We were the first credit union to offer this service back in 1982, and we’ve been perfecting it ever since. Now we work with around 30 employers across London, including Transport for London, NHS trusts and local councils in the areas we operate in.
Why it works so well
The biggest reason salary deduction works is psychological – if you don’t see the money, you don’t miss it. Most people find they can easily live on slightly less when the money comes out before they get used to having it around.
Here’s what salary deduction does for you:
- No more spending your savings money before you actually save it
- Never miss a loan payment or get hit with late fees
- Build up a proper savings habit without thinking about it
- Improve your credit score through consistent payments
Plus, because we know we’ll get loan payments reliably, we can offer better rates than lenders who face more risk. Everyone wins – you get cheaper borrowing, and we get the security of knowing payments will arrive on time.
When salary deduction makes sense
Salary deduction works brilliantly if you’re one of those people who finds money just disappears from your account. You know the type – you get paid, mean to transfer some to savings, then somehow it’s all gone on daily life before you get round to it.
You might love salary deduction if you:
- Always have good intentions about saving but struggle to actually do it
- Work shifts or have irregular hours that make budgeting tricky
- Prefer things to happen automatically rather than remembering to do them
- Want to pay off a loan without the mental load of managing payments
It’s particularly popular with public sector workers because it feels similar to pension contributions or union dues – just another sensible deduction that sorts your finances out before you even think about it.
Most of our members start with manageable amounts like £20-50 per month. You’d be surprised how quickly that adds up when you’re not constantly dipping into it for other things.
Getting started
If you work for one of our partner employers – like Transport for London, Camden Council, Lambeth Council, Westminster City Council, or an NHS trust – getting started is straightforward. You can use salary deduction for savings, loans, or both.
Here’s what you need to do:
- Check if your employer already works with London Mutual
- Fill in the forms to authorise the deductions
- Decide how much you want to save or what loan you need
- Watch it happen automatically from your next pay packet
The best part? You can change the amounts later if your circumstances change. Got a pay rise? Increase your savings. Struggling due to a change in personal circumstances? We can often arrange to reduce things temporarily.
After four decades of doing this, we’ve got the process down to a fine art. Most people find it much easier than they expected, and wonder why they didn’t start sooner.
Why choose London Mutual
We’ve been doing salary deduction longer than anyone else – literally since we started in 1982. That means we really know how to make it work for you, whether you want to build savings or pay off a loan without the hassle.
Our partnership with major London employers means thousands of people across the city are already using this system to sort their finances out. You’d be joining something that’s tried, tested, and designed around the reality of busy working lives.
The bottom line? If you’re tired of good intentions about money that never quite happen, salary deduction takes all the effort out of doing the right thing. Your future self will definitely thank you for it.
