Employee share schemes popular despite market turmoil

A major survey of 445 UK companies, including 79 of the FTSE 100, has revealed that the number of company employees investing in Save As You Earn (SAYE) share schemes increased by 5% last year, to just over 1.4 million.

Also 44% of eligible employees are participating in at least one SAYE share scheme, an increase from 38% the previous year, the survey by ifs ProShare, the voice of the employee share ownership industry in the UK, shows.
 
The average amount of money being invested into SAYE schemes was down slightly from £107 in 2009 to £101 in 2010, although this remains significantly higher than 2008 average of £86 per share plan.
 
The survey also contacted 429 companies offering Share Incentive Plans (SIP), which can be in a variety of forms including free shares given to employees, or partnership and matching shares whereby the employee receives additional shares for each one they buy.

It found that just over 900,000 employees participated in some form of SIP out of a total of 1.6 million who were eligible. Over 350,000 employees received free shares from their employers with a reported total value of £238.8 million.

‘This year's survey shows that despite the market turmoil in recent years, employees remain committed to this tax efficient, low risk method of saving. This is underlined by the fact that nearly half of all employees in our survey who can take part in a company SAYE share scheme do take up this option,’ said John Collison, head of ifs ProShare.

If a company's share price is not what they'd hoped at the end of their share plan they always have the option of withdrawing their saved money or waiting to see if the price rises in the future,’ he added.
 
The survey also revealed that whilst the trend for companies offering free SIP shares continued to fall, from 24 per cent in 2009 to 14% in 2010, while the number offering matching shares rose from 46% to 53%.

Employers who operate such share schemes often see an increase in company loyalty. ‘Share plans often strengthen the employee's bond with their company as they know that in some measure, large or small, their efforts are directly contributing to the value of the company and the value of their share holding,’ explained Collison.