EXCLUSIVE: More than half (54%) of employer respondents that provide sharesave schemes intend to increase the monthly savings limits when new legislation comes into force from 6 April, according to research by Equiniti.
Its research, which surveyed 40 employers that provide a sharesave plan and 26 that provide a share incentive plan (Sip), found that a third (33%) of respondents that provide sharesave plans to staff do not need to change their scheme rules to take account of the new limits.
From 6 April 2014, the investment limits for sharesave schemes will double, from £250 to £500 a month, and the maximum value of shares an employee can acquire with tax advantages through Sips will rise by £300 a year to £1,800 for partnership shares and to £3,600 a year for free shares.
Among respondents that provide sharesave schemes:
- 78% do not intend to change the launch date of their sharesave scheme as a result of the increase in limit, while 22% do.
- 89% currently allow the maximum £250 monthly savings limit.
- 33% do not need to change their scheme rules to take account of the limit change, while 17% do and 50% will need to check.
- 81% do not think the new limit will have an impact on how shares are sourced at maturity, while 19% believe it will.
Among respondents that provide Sips:
- 26% do not need to change their Sip rules to take account of the limit change, while 16% said they will and 58% will need to check.
- 60% said the new limits will not change how or when they award free shares, while 40% said it will.
- 88% intend to increase the savings limits that employees can make for partnership shares.
- 73% said the increase will not change the matching ratio, while 27% said it will.
Jennifer Rudman, employee share plans manager at Equiniti, said: “The sharesave survey showed that most organisations are likely to increase the monthly savings limits, resulting in an increase in take up, a higher number of shares under option and more investment.
“It was felt that the benefit would be greatest for those already saving at the limit. However, there were concerns around costs, headroom and sourcing new shares, meaning there may be some restrictions put in place.
“There is still some work to do to check whether scheme rules need updating and whether there are any changes needed by payroll.”