London, 30 September 2021 – ProShare, the body representing employee share ownership in the UK, has today released its 2020 report into Save As You Earn (SAYE) and Share Incentive Plans (SIP). The findings show record engagement and that employees investing in these plans are on course for possible bumper gains in the longer term when share prices deflated by the pandemic recover.
Employee confidence in the value of Save as you Earn plans has never been higher. The average monthly savings for new grants in 2020 rose from £138.51 in 2019 to £146.06, the highest amount recorded. More employees are also taking a long-term view by committing to five-year saving plans with take-up at levels not seen since 2014, indicating that scheme participants are recognising that, in five years’ time, they will have a chance to purchase shares in their employer at, in some cases, a record low price.
2020 also saw a significant rise in the percentage of employees participating in company Share Investment Plans with 40.06% participation, up from 33% the previous year. The opportunity to purchase shares at a relatively low price seems to have driven the increased demand.
There was also a drop in the number of employees making a withdrawal from their SIP funds. With share prices in 2020 often at very low levels, 43% fewer participants opted to cash in part or all of their plan holding.
Murray Tompsett, Head of ProShare comments:
“The impact of the pandemic seems to be driving a savings mentality. It is possible that employees working from home converted money saved on not commuting into increased savings for their future through a SIP or SAYE. As both types of plan must be open to all employees, the commitments made are good news for increasing the financial resilience of the workforce.
"For SAYE, the key findings indicate that savvy employees are aware of the opportunities to realise potentially large returns thanks to the low option price caused by the pandemic. Despite the fact that fewer plans were launched in 2020, with almost one third of companies delaying an offer due to Covid, it is extremely positive news that people are investing more money and for longer periods of time. However, the financial resilience of many employees was severely tested in 2020 and it is possible that some of the 8.69% of SIP participants who sold shares might not normally have chosen to do so.
“Employee share plans can have a profound effect on household finances. Research published earlier this year shows low earners in the bottom income quartile are on average £10,900 better off than people who are not employee shareholders. It is worrying, however, that there were just 17 new SAYE plans launched in 2020 – the lowest figure since 2013 and a huge drop from the record high of 92 we saw just two years later in 2015. We also know that while SIPs are attracting a record number of participants, the holding period required to achieve maximum tax efficiency is still discriminating against younger employees and those on lower incomes. The five-year holding period deters these groups from joining and gaining the full financial benefit, which in turn builds the participant’s financial resilience. Our membership is united in their ambition to see this shortened to three years. If there was ever a time for the UK government and policy makers to make it easier for employees to gain the benefits of employee share plans, it is surely now and we will continue to press the case strongly.”
This report is available to ProShare members, if you are a journalist and would like to obtain a copy please contact Maria Brooks on mbrookes@cgi.org.uk.
ENDS
For further information & photos please contact:
Maria Brookes, Media Relations Manager:
+44 (0)20 7612 7072
+44 (0)7890 649 143
Notes to Editors:
ProShare is a part of The Chartered Governance Institute UK & Ireland.
ProShare is the voice of the employee share ownership industry in the UK. It was established in 1992 by the Government, the London Stock Exchange and a number of FTSE 100 companies to promote Employee Share Ownership. ProShare is an independent membership organisation, funded by its members and its commercial activities.
More information: www.proshare.org
About the report
The six administrators participating in the 2020 SAYE survey provided data representing 410 companies (459 in 2019; 447 in 2018; 421 in 20147; 423 in 2016; 489 in 2015).
408 of these companies had live schemes (431 in 2019; 422 in 2018; 412 in 2017; 404 in 2016; 420 in 2015).
The eight administrators participating in the 2020 SIP survey provided data representing 428 companies (306* in 2019; 424 in 2018; 417 io 2017).
*In 2019 one administrator was unable to provide any SIP data.
