Four-fifths (80%) of respondents who participate sharesave employee share schemes do so because they believe they are a convenient way to save, according to research by Proshare.
Its Attitudes to employee share ownership report, which surveyed 1,699 employees across 11 UK organisations, also found that 67% of respondents find the matching shares that are available as part of a share incentive plan (Sip) are valuable to them, and 58% cite that the tax advantages of the plan are valuable to them.
The research also found:
- 75% of respondents who participate in a sharesave scheme do so because they want to profit from the shares and 38% took part in order to own shares in the organisation.
- 46% of male respondents who take part in a sharesave scheme do so for share ownership, compared to 26% of female respondents.
- 40% of respondents who do not participate in a sharesave scheme admit this is because they cannot afford to participate. Other reasons to not participate include that the respondent may not be with the organisation long enough to benefit (16%), that they have other arrangements (21%), or they do not understand how the scheme works (6%).
- 84% of respondents are aware that sharesave savings could be repaid at their request at any time, 86% are aware of a choice in savings terms, 92% are aware of the option price discount, and 58% are aware that they can take up to six months’ break from contributions.
- 54% of respondents who have been with their organisation for five to 10 years cite affordability as the reason why they do not participate in sharesave schemes, compared to 18% of respondents who have worked at their organisation for less than a year.
- 48% of respondents who do not participate in a sharesave scheme think that a shorter savings terms would encourage them to join the scheme, compared to 46% who would consider joining if they could vary their monthly contribution amount.
- 69% of respondents are aware of Sips, with 80% aware that they must hold their shares for five years for them to be tax-free and 42% are aware that the free share maximum award value is £3,600 per tax year.
- 68% of male respondents value the tax advantages of Sips, compared to 28% of female respondents.
- 70% of full-time respondents participate in Sips to gain profit from the shares, compared to 46% of part-time respondents.
- 25% of respondents do not participate in Sips because they do not understand how it works, 32% cannot afford to participate, 17% are not aware of the plan, 24% believe shares are a risky investment and 24% think they may not be with the organisation long enough to benefit.
- 66% of respondents who do not participate in a Sip would consider joining if there was a greater maximum value of free shares at award, 49% would be encouraged to participate if there was an improved matching ratio, and 38% would think about participating if the maximum holding period was shorter than five years but longer than three years.
Gabbi Stopp (pictured), head of employee share ownership at Proshare, said: “When [sharesave] was introduced the aspiration was that it would democratise share ownership, improve employer and employee relations and act as a retention tool. The evidence now suggests that the very features that were originally designed to encourage retention are now discouraging increasing numbers of employees from participating.
“There is a long-established link between employee share ownership, employee engagement and increased productivity. But the length of time that an employee is required to commit to a share plan, for example, five years minimum for Sip, and the penalties if she or he doesn’t stay with their employer for this length of time, simply does not match up to the current average tenure for millennial employees of 2.2 years, compared to 4.4 years average overall.
“[Under a quarter (24%)] of all non-joiner employees say they don’t join their [organisation’s] Sip because they wouldn’t be there long enough to benefit from it. This figure leaps to 48% among millennials and 50% among employees with less than one year’s service.
“To ensure both employers and employees continue to benefit from share ownership we need to remove some of these barriers to entry, introduce more flexibility and promote the benefits to young workers.”