Share Save - whats the catch?
Discussion
My Employer has just announced this, trying to get my head round it and work out whats in it for them over me... (I'm a cynic!)
Been around since the 80s apparently, but I've never heard of it (although I've never worked for a PLC before either).
https://en.wikipedia.org/wiki/Sharesave
The announcement of this scheme is interesting timing for me as I'm finally about to get a reduced Childcare bill, most of which I pay as a salary sacrifice, so I was thinking about what do with this money I never had before from September onwards. I am also trying to be a bit more pro-active (still 30 years out from state retirement age though I'd really rather not have to work till then!).
- Employer takes some of my wage (£5-500), post-tax, and puts it in a locked account, from now, for 3 years/36 months.
- That money does not earn interest. It is however protected in the normal FSCS manner. If I quit my job, they just give it back. If I change my mind between now and 36 months, they just give it back.
- In 3 years time (only at this point), I then decide whether to buy shares with it, at TODAYS price less 20%, or just take the cash back out.
- Pending what the share price has changed to, I could then immediately re-sell, make a profit is the price is more than 80% of what it is today, or keep the shares for the future.
- Its a one time, decide now, are you in or out job, need to know by next month type of thing.
Whilst it initially sounds like qood plan, I'm not sure if there are better things to do. I pay a small amount of higher rate tax and have been using the Childcare sacrifice along with increased pension contributions stuff to try and be most efficient with this. I think this plan maybe looks more appealing for some of the employees who earn a bit less than me (maybe its aimed at them or younger staff?).
- I already have a small SIPP setup with a lump sum from an old pension and own some company shares (amongst some other funds). As share-save is post tax, I could just put this money into the SIPP instead, and whilst I wont get the 20% reduction in BUY price, I get the other SIPP benefits when I come to retire. I havent paid much attention to this since it was setup, maybe thats where I should focus.
- My actual company pension is also salary sacrificed, so I could pay a bit more into that (saving 40%) and beat then 20% buyers discount anyway.
- The company historically has done well (yes, yes I know, past performance etc), weathered the pandemic pretty much the best in their respective industry and has a strong looking overall future - I have certainly no plans to leave them anytime soon.
I know theres not enough figures or info to decide yes/no but what do we think? Does anyone elses employer do this? Am I thinking about the right kind of factors to account for or have I missed an obvious reason to join or run away?!
I believe a key difference for me could be any potential changes in what the tax brackets are, and I've no idea if this is something that maybe on the cards within 36 months or not - frankly im actively avoiding the news right now!
Been around since the 80s apparently, but I've never heard of it (although I've never worked for a PLC before either).
https://en.wikipedia.org/wiki/Sharesave
The announcement of this scheme is interesting timing for me as I'm finally about to get a reduced Childcare bill, most of which I pay as a salary sacrifice, so I was thinking about what do with this money I never had before from September onwards. I am also trying to be a bit more pro-active (still 30 years out from state retirement age though I'd really rather not have to work till then!).
- Employer takes some of my wage (£5-500), post-tax, and puts it in a locked account, from now, for 3 years/36 months.
- That money does not earn interest. It is however protected in the normal FSCS manner. If I quit my job, they just give it back. If I change my mind between now and 36 months, they just give it back.
- In 3 years time (only at this point), I then decide whether to buy shares with it, at TODAYS price less 20%, or just take the cash back out.
- Pending what the share price has changed to, I could then immediately re-sell, make a profit is the price is more than 80% of what it is today, or keep the shares for the future.
- Its a one time, decide now, are you in or out job, need to know by next month type of thing.
Whilst it initially sounds like qood plan, I'm not sure if there are better things to do. I pay a small amount of higher rate tax and have been using the Childcare sacrifice along with increased pension contributions stuff to try and be most efficient with this. I think this plan maybe looks more appealing for some of the employees who earn a bit less than me (maybe its aimed at them or younger staff?).
- I already have a small SIPP setup with a lump sum from an old pension and own some company shares (amongst some other funds). As share-save is post tax, I could just put this money into the SIPP instead, and whilst I wont get the 20% reduction in BUY price, I get the other SIPP benefits when I come to retire. I havent paid much attention to this since it was setup, maybe thats where I should focus.
- My actual company pension is also salary sacrificed, so I could pay a bit more into that (saving 40%) and beat then 20% buyers discount anyway.
- The company historically has done well (yes, yes I know, past performance etc), weathered the pandemic pretty much the best in their respective industry and has a strong looking overall future - I have certainly no plans to leave them anytime soon.
I know theres not enough figures or info to decide yes/no but what do we think? Does anyone elses employer do this? Am I thinking about the right kind of factors to account for or have I missed an obvious reason to join or run away?!
I believe a key difference for me could be any potential changes in what the tax brackets are, and I've no idea if this is something that maybe on the cards within 36 months or not - frankly im actively avoiding the news right now!
Edited by snotrag on Tuesday 2nd August 13:14
I remember the first sharesave scheme I went into with work... £100/month
twice since I've maxxed out to £500.. it's great providing you're ok not accessing the money for 3 years and if you have a small degree of confidence in the shareprice growing
(it's worked out very well for me btw!)
twice since I've maxxed out to £500.. it's great providing you're ok not accessing the money for 3 years and if you have a small degree of confidence in the shareprice growing
(it's worked out very well for me btw!)
My employer offers a scheme very similar to this. I have been participating for the last 10 years.
when the option matures at the end of 3 years I always exercise the option to purchase the shares as the price has, so far, always increased and it's a no brainer. After a while you don't miss the money as it's taken from your salary on pay day.
I have another option maturing in December this year and based on the share price today I will again be buying the shares at the option price.
Personally I think its a great way to save and I've managed to accumulate a decent number of years over the years using the scheme.
when the option matures at the end of 3 years I always exercise the option to purchase the shares as the price has, so far, always increased and it's a no brainer. After a while you don't miss the money as it's taken from your salary on pay day.
I have another option maturing in December this year and based on the share price today I will again be buying the shares at the option price.
Personally I think its a great way to save and I've managed to accumulate a decent number of years over the years using the scheme.
My experience is similar to those above. My firm has offered Sharesaves for a number of years and I put the maximum albeit I have 3 running, 2 at £150/m and 1 at £200/m. This way have a nice lump maturing every December which I generally take in shares. Whilst they don’t earn any interest they are a great way of saving risk free, and if things go awry you can always cash them in early and get your money back.
s111dpc said:
My experience is similar to those above. My firm has offered Sharesaves for a number of years and I put the maximum albeit I have 3 running, 2 at £150/m and 1 at £200/m. This way have a nice lump maturing every December which I generally take in shares. Whilst they don’t earn any interest they are a great way of saving risk free, and if things go awry you can always cash them in early and get your money back.
I did similar at my old employer - I set up a scheme maturing every year to spread my risk as I was never sure when I'd decide to leave. Its worthwhile doing, I did pretty well out of it. Just signing up with my new employer actually!
Its a no brainer. The old Midland Bank/HSBC scheme was 5 years. IIRC you could move some into a ISAon top of you annual CGT allowance. The missus and I Were buying at £1.19 and selling at £13 I think. We used to lump in £250 each every month which I think was the max at the time.So every year we each had a plan maturing and started a new one.
Overall looks a good way to save each month, but not always a winner. My last company had a scheme I was in for 10 years - It would purchase shares on a quarterly basis. All fine, until a rapid 50% slump in value wiped out any gains. I think I barely got back what I put in. So, usual caveats of shares can go down as well as up apply.
abzmike said:
Overall looks a good way to save each month, but not always a winner. My last company had a scheme I was in for 10 years - It would purchase shares on a quarterly basis. All fine, until a rapid 50% slump in value wiped out any gains. I think I barely got back what I put in. So, usual caveats of shares can go down as well as up apply.
Shares going down is not really an issue with this type of sharesave. In this case as its an option to buy at the end, nor an obligation to buy, so if they are down then dont buy and get your money back.The loss in this case is any interest etc. you could have made elsewhere in the 3/5 years.
The other type of sharesave is save as you earn where you buy a set amount of shares each month for a discount over current price, that one is more risky but potentially good if you are a higher rate taxpayer as more wiggle room for share price.
anonymous said:
[redacted]
Enrol. Buy in 36 months but at today-20% price. Todays price is £10.
Say I put in £100 a month for 36 months.
I get the option to buy 450 shares at £8 (Todays £10, -20%).
If the shares are at £15 in 36 months time, bosh, I've just bought £6750 worth of shares (450*£15) for £3600.
Sell em, or keep em.
Or if the share price in 36 months has bombed to £4. I just get my £3600 back in cash.
Given that I am unlikely to otherwise put much effort in to 'investing' the money, and nor will it earn much if i just sit on it, it does seem to be win or draw...
A no brainer to invest.
Mrs J works for the company that will probably run the scheme for your employer. She has invested in every scheme they offered their employees up until they were purchased by a private equity company last year and delisted. Over the years, she trebled her money with one plan, made a small profit on another and had her full investment returned on the others as they hadn't matured.
Mrs J works for the company that will probably run the scheme for your employer. She has invested in every scheme they offered their employees up until they were purchased by a private equity company last year and delisted. Over the years, she trebled her money with one plan, made a small profit on another and had her full investment returned on the others as they hadn't matured.
I did it as an apprentice with Scottish gas and made a shed load. Was staying at home and put £250 a month maximum over 5 years I think. 3 times I did the max.
Bought shares at 40p they were £1 when we took the option with the bonus etc.
sold most of them when they were £3. I also got a split and equal shares in centrica and BG when the split as well as National grid and lattice group.
Glad I got rid when I did as they dropped to next to nothing.
They owed me nothing as I bought my first house cashing some in.
Bought shares at 40p they were £1 when we took the option with the bonus etc.
sold most of them when they were £3. I also got a split and equal shares in centrica and BG when the split as well as National grid and lattice group.
Glad I got rid when I did as they dropped to next to nothing.
They owed me nothing as I bought my first house cashing some in.
It’s money for old rope (as long as you can afford to not have access to the funds for the three years).
I always maxed out my contributions to it while I worked for BP and made a small fortune out of it. When they matured I bed and ISA’d them straight into S&S ISA’s
I always maxed out my contributions to it while I worked for BP and made a small fortune out of it. When they matured I bed and ISA’d them straight into S&S ISA’s
Edited by paralla on Tuesday 2nd August 21:00
Great idea do the maximum you can afford. I did £100 the first year and then £100 a month on second and third year.Increasing amount when scheme raised contribution amount. So I had one maturing every year did this since 1994 with utility company didn't take dividends, reinvested them so compounded up share holding. Got a nice nest egg to help early retirement plan..
Very worthwhile.
I’ve done well out of every one I’ve participated in.
It’s very nice not really noticing the automatic deductions before being paid each month but getting a sizeable sum at the end of the 3/5 years.
There’s a way to transfer the shares into a S&S ISA at the end (within a certain timescale from maturity) which also means you are sheltered from any Capital Gains Tax upon disposal.
My shares are in USD and I dip into them periodically to sell when the price is strong and the USD-GBP exchange rate is most favourable.
I’ve done well out of every one I’ve participated in.
It’s very nice not really noticing the automatic deductions before being paid each month but getting a sizeable sum at the end of the 3/5 years.
There’s a way to transfer the shares into a S&S ISA at the end (within a certain timescale from maturity) which also means you are sheltered from any Capital Gains Tax upon disposal.
My shares are in USD and I dip into them periodically to sell when the price is strong and the USD-GBP exchange rate is most favourable.
Same here, done £250/month on a couple of years’ schemes and from three years in I get back approaching double the £9K I’ve put in. It’s not like getting decent stock options but a nice little extra. Due to the £500/month limit I limit I then have to miss out on the scheme for a year
As others have said, if you can afford the monthly outlay it’s a no brainier OP. I first did one in 2008 with a 35p option price. Maxed out (£250 at the time) over 3 years, by which time the price had quadrupled. The wife’s got a chunky one on the go now which is looking at returning double the option price. Of course the important factor is that if you don’t get the run of the green you just take the cash option on maturity.
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