Strategic Finance

SAYE rate rise welcomed

 Print E-mail
Written by Roberta Murray   
Wednesday, 03 September 2008
500 000 UK employees set to benefit according to ifs ProShare.

ifs ProShare has today welcomed the news that the bonus rate has increased for the Save As You Earn (SAYE) scheme.

The increases comes into force this week and will benefit over 500,000 UK employees.
 
According to the latest ifs ProShare annual survey, over 2 million UK employees are currently participating in a SAYE Scheme.
 
An SAYE scheme is a savings plan where employees invest a fixed amount of between £5 and £250 over a 3, 5 or 7 year term. At the end of this period employees can use the money, plus a bonus to buy discounted shares in the company they work for.

Alternatively, employees can simply opt to have their savings returned to them together with a bonus. These bonus rates increased with effect from September 1 2008.
 
Approximately 500,000 employees invest in an SAYE plan each year and are therefore likely to benefit from these increased rates.
 
Julie Richardson, Head of Employee Share Ownership at ifs ProShare said, "this is very good news for the hundreds of thousands of employees who sign up to a SAYE scheme each year and should encourage greater take up of what is already a very tax efficient savings mechanism."

The new bonus rates replace those that had been in effect since April 2008 which are listed in brackets:

3 year plans  4.23% (2.84%)

5 year plans  4.36% (3.22%)

7 year plans  4.28% (3.36%)

Early leaver rates (for those who withdraw their funds after 12 monthly contributions but before the scheme matures) 3% (2%)

These rates will be effective for employees who sign up to SAYE contracts on or after 1 September 2008 but do not apply to SAYE contracts that commenced before this date.

The rates were calculated using a fixed formula developed by ifs ProShare and the Treasury. The formula links the rates to long-term swap rates.

 
 
Share this article:
Digg It! Digg it!   Post to del.icio.us del.icio.us   Seed in Newsvine Newsvine   Post to reddit Reddit   Facebook  Stumble It! Stumble It!  

Subscribe to our weekly newsletter for top jobs, news, blogs and more

Get the latest senior finance job roles, news, blogs, features, industry moves and opinion delivered directly to your inbox every week. Sign up here .