Employee sharesave bonus rate boost

Employee sharesave plans received a boost with a generous increase in savings bonus rates in September 2008.

Julie Richardson, head of employee share ownership at IFS ProShare, said, “The news that the bonus rates have increased provides further incentives for employees to save through a sharesave scheme. As the bonus is tax free, for a three year plan, the new 4.23% rate equates to 5.28% for a basic rate income taxpayer or 7.05% for a higher rate taxpayer.

“For five year plans the new 4.36% rate is equivalent to 5.45% for a basic rate income taxpayer or 7.2% for a higher rate taxpayer.”

Staff at several large companies benefited from maturing schemes over the summer. Media conglomerate Pearson’s UK-based staff who took part in the five-year international sharesave plan gained an average of £6,138 when the plan matured last month, while those in the 2005 three-year plan earned an average £978.

EasyJet staff were also in the money in August, despite volatile share prices during the three year savings period. At one point sharesave options were worth an average £17,000 each on paper; however final average values were £6,000.

Employers also continue to launch sharesave schemes despite the economic downturn. Share scheme lobby group IFS ProShare predict that 50 plans will be launched in 2008.

Abbey launched a sharesave for 16,000 staff this month to keep them engaged in the bank, while Thomas Cook launched both a share incentive plan (Sip) and a sharesave to engage and retain staff.

Back to Employee Benefits Report for Financial Directors – September 2008