At last month’s Employee Benefits Pensions and Workplace Savings Summit, several employers called for a review on the limits around approved employee share schemes. Hopefully, their appeals will fall on open ears as the government launches an internal review into employee share ownership that will report in the summer and conclude ahead of the Autumn Statement.
We, along with several large employers, hope the review extends not only to employee ownership among non-PLCs, but also to the limits put in place on sharesave over two decades ago, and on the share incentive plan (Sip) over a decade ago. The Sip has not seen its upper limit of £1,500 a year raised since it was launched back in 2000. But more pressing are calls from employers asking for the scheme’s tax taper period to be reduced from five years to three. Although the current tax breaks are good, asking employees to hold relatively small amounts of shares for a total of eight years to get full tax relief is undermining the benefit for the very people it is targeted at.
Also, since 1991 there has been a £250-a-month cap on savings into sharesave. Two decades on, and up to a quarter of employee savers have hit this upper limit, so a review to raise the cap is well overdue. Taking inflation into account, the limit would now be £450 if it had been adjusted annually. While it might be politically contentious to offer financial breaks to people who are sufficiently affluent to be able to afford this high figure, any support to encourage workplace savings should be welcomed.
The rise in interest in workplace savings, driven not least by the introduction of pensions auto-enrolment from later this year, has led us to explore this area in more depth. This month, we launch our first Workplace Savings Quarterly. In it, we set out the importance of workplace savings, and future issues will explore the practicalities of various savings vehicles. I look forward to receiving your feedback on this important area.
And finally, but most importantly, congratulations to all the finalists in the Employee Benefits Awards! You have done fantastically well to get this far.
Debbie O’Donovan, Editor
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