As the voice of the employee share ownership industry, we have lobbied the Treasury to raise the savings limits in line with inflation, reflecting the views of the members and their employees that the organisation represents.
IFS Proshare was delighted to learn that Chancellor George Osborne is to increase investment limits on sharesave plans to £500 a month and on share incentive plans (Sips) to £1,800 a month.
Although no one can say for certain whether increasing the limits will immediately result in more organisations launching employee share schemes this year, what, in effect, the campaign has done is to create a more fertile ground for employers that are considering launching employee share plans.
By doubling the savings limits, employee share ownership, as a viable savings tool, will become a lot more attractive to a greater diversity of employees and size of organisation.
The benefits of employee share ownership are already well known and the recent example set by Sainsbury’s demonstrates that growing numbers of employees are joining their employer’s share plans.
In January 2014, the retailer announced that more than 21,000 employees had joined its scheme in the first three quarters of the financial year, and 11,000 staff shared in a £23 million maturation of two previous sharesave schemes.
Crucially, Sainsbury’s has also made increasing employee share ownership a key goal of its 20×20 sustainability plan, with the aim of boosting membership by 25% by 2020.
The savings limits are due to rise from April 2014, so it will be a few months before we see the effects start to come into fruition. Nonetheless, IFS Proshare is confident that once the increases come into force, the demand already shown by Sainsbury’s employees will be replicated in other organisations as 2014 progresses.
John Collison is head of employee share ownership at IFS Proshare