Posted by Chris on February 04, 2009
RM2 today alerted Times Journalists Mark Atherton and Laura Whateley to forthcoming changes to SAYE bonus rates - before they are announced by HM Treasury.
Normally, SAYE bonus rates are changed once, or at most twice a year. But recent turmoil in the capital markets has meant that changes to the bonus calculation have been triggered more frequently. The last change was as recently as 27th December 2008. Bonus rates are linked automatically to market reference swap rates which makes it possible to predict changes.
Under a SAYE (Save As You Earn) share option scheme, employees save up to £250 per month over 3 or 5 years. At the end of this period they received a tax free bonus, expressed as a fixed number of free contributions. They can then use this money to acquire a fixed number of shares in the employing company - or if they prefer, they can have a return of the cash. The new bonus rates on a 3 year savings contract will equal 0.6 contributions (1.08 per cent.) and on a 5 year contract, 2.6 contributions (1.67 per cent.)
The Times quoted RM2 director Geoff Bond who said "despite the new lower bonus rates, many savers signing up to a new plan today could reap juicy profits in three, five or seven years if, as expected, shares recover from their present level."
Further details of SAYE schemes, including the bonus rates applicable up to 28th December 2008, can be found here.