ifs ProShare, a not for profit organisation concerned with the promotion of employee share ownership, has welcomed the Treasury's decision to increase the interest rates payable on Save As You Earn (SAYE) Sharesave Schemes. The increases come into force today and are likely to benefit over 500,000 employees.
96 companies in the FTSE 100 offer an employee share ownership scheme as well as hundreds of other companies across the UK. Approximately 1.7 million employees are currently participating in such a scheme.
Fiona Downes, Head of Employee Share Ownership at ifs ProShare, said;
"This is good news for the 500,000+ employees who sign up to a SAYE scheme each year because the revised rates will allow employees to buy more shares under the scheme or receive a greater return on their savings.
This should encourage greater take up of what is already a very tax efficient savings mechanism."
The new bonus rates are:
| Contract Type | Bonus Rate
(Previous rates in brackets) |
Effective interest rate
(Previous rates in brackets) |
|---|---|---|
| 3 year | 2.4 monthly payments (1.8) | 4.23% (3.19%) |
| 5 year | 7.2 monthly payments (5.5) | 4.48% (3.46%) |
| 7 year | 13.3 monthly payments (10.3) | 4.46% (3.52%) |
| Early leaver rate
(for those who withdraw thier funds after 12 monthly contributions but before the scheme matures) |
N/A | 3% (2%) |
These rates will be effective for employees who sign up to SAYE contracts on or after 1 September 2007 but do not apply to existing SAYE contracts.
The rates were calculated using a fixed formula developed by ifs ProShare and the Treasury. The formula links the rates to long-term swap rates.
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