Research on SAYE schemes

FINANCIAL PARTICIPATION

The average amount being saved each month in the latest operation of SAYE schemes ranges from £32 to £145, with a median level of £69, according to a study by Incomes Data Services.

IDS found that three-year contracts were more popular than five year-contracts in 15 of the 18 companies that provided employee take-up figures.

What is a SAYE scheme?

The Save-As-You-Earn (SAYE) scheme -- sometimes referred to as Sharesave -- is an Inland Revenue-approved all-employee share option plan. It offers employees a risk-free opportunity to invest in the success of their employer by acquiring an option to buy company shares for a fixed price at a later date. The shares are purchased at the end of a special savings contract that can last for three, five or seven years.

For employees, there is the prospect of significant gains if the company's share price rises substantially higher than the option price, which is fixed at the beginning of the contract. And there is no risk involved, because employees can simply take a refund of their savings if the share price has fallen by the time the contract matures. There are also tax advantages for employers and employees including a tax-free bonus for scheme participants at the end of the savings contract.

Within the legislative and tax approval framework, there is scope for companies to make decisions about eligibility requirements, the length of the savings contract and the amount by which the option price is discounted.

What you will find in this report

This eight-page article by IDS looks at how SAYE schemes work:

sets out the key Inland Revenue requirements including annual savings limits
highlights the tax advantages for employees and employers
includes details of the SAYE plans operated by 25 named companies
reports on the participation rates for these schemes and the average amounts being saved by employees each month
gives examples of the typical gains made by employees in some recent scheme maturities.

Want to know more?

Title: "Taking a share in success: SAYE schemes", IDS HR Studies Update 795, April 2005.

Availability: To order your copy contact customer services at Incomes Data Services in London, tel: 020 7324 2599.

IDS is a leading UK information and research service on employment issues, providing a range of publications for employers, unions, government departments and other agencies. To find out more visit www.incomesdata.co.uk

Posted 10 May 2005