Companies introduce sharesave schemes to encourage the savings habit in their employees, and to provide corporate glue around their share price. They have been around for more than 30 years, are popular and employees are comfortable with how they work.
Some might say it is best not to change a winning formula, but there are many places where sharesave schemes could do with a spring clean. There are three simple ways to make them more employee-friendly.
An obvious place to start is to increase the maximum savings limit, which has been stuck at £250 a month per employee since 1991. About a quarter of savers are now at the limit, so there is appetite for it to be raised. Even an adjustment for inflation would take the limit up to about £450. However, now might not be the easiest time to do it, because it gives tax benefits to people who can afford to save £250 a month or more.
Secondly, at the moment, even a three-year savings contract can seem like a long commitment. Increasing the flexibility in the rules over missing payments and making payments from savings, rather than salary, would show sympathy with the difficulty many people have in putting aside regular amounts.
Finally, to encourage employees to think about share schemes in terms of their longer-term finances, it should be much easier to transfer sharesave gains into an independent savings account (Isa) or a pension.
- Malcolm Hurlston, chairman of the Employee Share Ownership Centre
