More than 1.4 million employees saved an average of £122.94 a month in 2014 by taking part in company share schemes, according to ifs ProShare.
In comparison, 1.25 million employees saved an average of £107.76 a month in 2013.
Employee share schemes, such as Share Incentive Plans (SIPs) and Save As You Earn (SAYE), allow employees to purchase shares in the company. Most schemes have tax advantages such as not paying income tax and national insurance on the value of shares.
ifs ProShare attributes the rising popularity of share ownership to the government’s decision to raise the monthly savings allowance in SAYE schemes from £250 to £500 from April 2014. Since the increase, the number of employees in SAYE schemes rose from 378,420 to 576,538, and a fifth of participants increased their monthly contributions.
Gabbi Stopp, head of employee share ownership at ifs ProShare, said:
“These findings once again demonstrate the inherent value of employee share ownership to the economy, to productivity and to levels for savings throughout the UK.
“It is encouraging to see that recent changes introduced by HMRC and campaigned for by ifs ProShare have led to a greater uptake from employees deciding to participate in their companies’ share schemes.”
Employer benefits of employee share schemes
The data reveals the potential benefits employers can reap from offering share ownership to employees. According to their figures, staff work for longer in companies that provide employee share schemes:
- the number of employees choosing 5 year contracts increased from 17.5% to 20%
- employees contracted for 3 year periods fell to 80% from 82.5%.
Further benefits to employers include:
- recruitment of talented employees
- staff incentives to increase productivity
- increase staff loyalty
- provide employees with a stake in the success of the company.
However, there are disadvantages such as the initial admin costs and the effect on morale if share prices fall.
Contact us to discuss introducing employee share schemes to your workplace.