How your job can boost savings pot
Although 2011 has been dire for savers, and small investors have glumly watched shares go backwards amid fears for the euro and dollar, many people have enjoyed the windfall of a four-figure sum thanks to their job.While the John Lewis Partnership is famous for generous pay and conditions - it gave an average of £2,500 to each of its 76,500 staff in March - plenty of other workers have been in luck this year too.
Even though the housing market is suffering, hundreds of staff at LSL Property Services, a York-based estate agency and parent company of high street brands such as Your Move, Reeds Rains and online surveyors e.surv, are cockahoop after sharing a multimillion-pound payout from a Sharesave scheme launched in 2008.
LSL Property Services employees were allowed to set aside anything between £10 and £250 from monthly salaries if they took up the option of buying LSL shares at a discounted price of £1.15.
Given the disasters of 2008 which culminated in the global banking crash, some employees probably thought it all sounded far too risky.
In fact, LSL's share price forged ahead and still is today, despite talk of gloom and doom. When the Sharesave scheme matured earlier this summer, each share cost £2.82, so employees who had saved the maximum £250 per month over the three years saw £9,000 turned into more than £22,000, if they sold their shares on the earliest possible date.
If they kept their shares, they are even richer. This week, LSL Property Services shares changed hands around £3, and could presumably go higher if the housing market returns, as it must do one day to the heights of the last boom.
Last month, it was the turn of Asda workers to clean up: a £49 million payout to 14,700 employees on the maturity of a three-year Sharesave scheme operated by the parent company, US giant Walmart, means somebody who saved £50 a month collected more than £3,300 - some £1,400 more than their original investment of £1,920.
Sarah Dickins, policy director at Asda, says: "This is the third consecutive year our colleagues have enjoyed a record Sharesave payout.
"They drive the long-term success of our business. With a 70% increase on the money they invested for this year's payout, I am delighted many of our employees are reaping the rewards of their hard work."
Earlier this month, retail chain Sports Direct reported profits for the year ending in April of just more than £200 million, and an £88 million payout under its bonus share scheme, which means 2,200 staff in its shops, warehouses and head office will land an average of £44,000 each.
These payouts are all the more valuable because they come at a dire time for family finances.
But perhaps the biggest attraction is that in many cases, a fat profit is secured with no risk whatever. If the share price has gone down during the specified saving period, Sharesave applicants can take their money back, plus a cash bonus, and let their option lapse.
Phil Hall, head of ifs ProShare, which promotes the benefits of these schemes, says: "There are four approved schemes to help workers share the benefits of successful companies, the most popular are the all-employee share schemes, Save As You Earn (SAYE) and Share Incentive Plan (SIP).
"The SAYE Sharesave scheme started in 1980, and the Share Incentive Plan started in 2000, which drip-feeds shares to employees on a monthly basis.
"They are available to millions of employees working from top to bottom in an organisation: checkout operators at supermarkets, bank cashiers, gas and electricity workers and many, many others.
"They also include many senior executives. For example, at Centrica, and many other FTSE 100 companies, the chief executive participates in an all-employee share plan. This sends a strong message to other employees about the importance and value of saving."
Ifs ProShare research shows that 79 FTSE 100 companies operate them, along with more than 150 of FTSE 250 firm.
In many cases, share options are offered at a discount of up to 20% on the existing market price when the scheme starts, to enhance the prospect of eventual success.
"They are obviously helpful to workers", he says, "but employers see benefits too. They improve productivity, and give employees a feeling they are part of their business."
More than one million workers are enrolled in Sharesave schemes, and a slightly smaller number in Share Incentive Plans.
Now unbiased.co.uk, a website designed to match consumers with local financial advisers, warns that workers who fail to use tax-efficient share schemes could miss out on tax breaks worth £152 million this year alone.
The figure is based on the calculation that there are currently 13,135 companies running tax-advantaged employee share schemes in the UK, which give employees returns free of income tax and National Insurance.
Karen Barrett, chief executive of unbiased.co.uk, says, "Share Incentive Plans are a great way of being tax efficient, and an increasing number of companies are offering them each year.
"While various share savings options existed before the Share Incentive Plan, not all employees in a company could benefit from them.
"Employees should make the most of this tax-saving opportunity, and an independent financial adviser can help you decide whether a Share Incentive Plan suits your own financial circumstances.
"An independent financial adviser can give you advice on the most suitable investment and savings products on the market."
According to unbiased.co.uk, there are particular attractions to the Share Incentive Plan, described by HM Revenue & Customs as "the most tax-advantaged all-employee share scheme ever introduced into the UK."
Employers buy up to £1,500 of 'partnership shares' from pre-tax monthly salary or weekly wages, and firms can give up to two free 'matching shares' for each partnership share which an employee buys.
If they keep their shares in the scheme for five years, employees pay no income tax or National Insurance Contributions on profits made on their sale, though there may be a tax liability when employees take their shares out of the scheme after three years.
When they go into a share scheme, employees should obviously be sure that their monthly income is enough to allow regular donation. If they fail to keep up payments, they are dropped from the scheme.
They should also avoid having too large a proportion of their savings tied up in their own company.
Many employees at Northern Rock and Enron, the US giant, suffered devastating losses running into thousands of pounds when most of their savings were held in their companies which suddenly collapsed.
There is one other loophole with approved employee share plans: employees holding share options can lose out.
If companies are taken over by private equity, share options are cancelled without compensation. Any money paid in to that point is returned.
Workers at the high street giants Boots and Debenhams lost out in this way when private equity firms took over both companies, but they were exceptions to the general rule.
In most cases, most employees who build a shareholding in their own company have little reason to regret signing up, even when stock markets are in dull phases like we have in London at present.
:: Information: ifs ProShare (020 7444 7141 and www.ifsproshare.org)
Poundnotes
:: More than 10,000 people in the first week snapped up Barclaycard Platinum cards which offers 0% interest on balance transfers for a record 24 months, with an approval made, on average, every minute. The offer is available for a limited period.
Besides the two-year interest-free period, applicants through barclaycard.co.uk enjoy an exclusive discount of £20 off the 2.8% handling fee, if they transfer £3,000 or more. That means a customer transferring £3,000 effectively pays a low 2.1% fee.
Barclaycard Platinum also offers 0% on purchases for three months, and typical APR of 17.9%, variable.
A new Barclaycard Platinum customer transferring £3,000 from a rival charging 18.9% saves £935 in interest payments over 24 months. Direct applicants to barclaycard.co.uk get an additional £20 discount on their balance transfer fee, paying £64 instead of £84.
Enquiries: 0844 811 9111 and www.barclaycard.co.uk.
:: Sales of equity release plans to over-60s keen to unlock money from bricks and mortar climbed by up to 5% in the first half of 2011, confirming the ongoing recovery in the market after three years of decline, says Key Retirement Solutions.
The specialist financial adviser says there's £197 million of untapped cash still to be withdrawn. It says the average initial drawdown release was £28,174 in the six months but the total amount available was £53,328, and the average loan overall was £44,314.
Some 10,448 plans were sold in the first half of 2011 - about 5% higher than the 9,928 in the first half of 2010. Equity released amounted to £463 million against £449.1 million in the same period of 2010.
The proportion of customers using some or all of the cash for home or garden improvements was virtually unchanged at 59% compared with 2010, but those using it to pay for holidays fell from 36% in 2010 to 31% this year. The proportion using it to clear mortgages rose slightly from 17% in 2010 to 20%.
Dean Mirfin, Key Retirement Solutions, says: "The significant fact which the industry has overlooked is that drawdown has changed the market forever - there is £19 7million from the first half of this year alone, which has yet to be used, which if factored into total sales would take us back to the 2006 peak levels of lending when single, higher, advance business was more prolific.
"Total lending inclusive of drawdown facility is £660 million for the first six months of this year."
Nationwide, eight of 12 regions saw growth in the total number of plans and seven of 12 regions saw total lending grow.
:: If you want to lock your money away in a fixed rate bond, act fast. The length of time a fixed rate bond is on the market has fallen to 37 days, the lowest level since December 2008, says Moneyfacts.co.uk.
Since base rate hit an all time low of 0.50%, the average length of time bonds have hung around for has typically been more than 100 days, peaking at 133 days in October 2009.
Michelle Slade, Moneyfacts.co.uk spokesperson, says: "In recent months, a downward trend for bond rates resulted in savers rushing to secure best deals.
"Once a few providers cut rates, others follow suit as no provider wants to pay more than necessary to attract savers' money.
"Money market rates are now notably lower than they were a few months ago and providers are probably using this to raise money for their lending rather than through their savings book.
Savers actively seek the best deal, and market-leading deals are launched and rapidly oversubscribed."
:: Metro Bank celebrates one year on Britain's high streets this week, and says "thank you" with a MasterCard rate for all existing and new customers of 0% for 12 months on purchases, balance transfers and cash advances.
Customers need a Metro Bank current account to be eligible for the exclusive offer. A 3% handling fee applies to balance transfers on new credit card applications but no charge on balance transfers to customers with existing credit cards. You can transfer balances to a Metro Bank credit card up to 75% of its limit.
:: High five savers
Phone No Rate Account Period Deposit Interest paid
Whiteaway Laidlaw Bank 0845 266 6611 4.75% Fixed Term Deposit 1 Five Year Bond £5,000 Yly
Birmingham Midshires 0845 602 2828 4.65% (F) Fixed Rate Bond Five years £1 Yly
Santander 0800 234 6065 3.30% Flexible ISA Issue 3 Instant £1 Yly
Coventry BS www.thecoventry.co.uk 3.10% Poppy Online Saver None £1 Yly
Aldermore 0845 604 2678 3.10% 90 Day Notice
90 Days £1,000 Mly
:: Top five borrowers
Phone No Rate Period Max% Adv Fee Incentive
HSBC 0800 494999 2.59% variable for term 60% Yes
Mkt Harboro BS 01858 412250 2.65% for three years 75% £195 Yes
First Direct 0845 610 0100 2.79% variable for term 65% £199 Yes
Yorkshire BS 0845 120 0874 2.79% to 30/09/13 75% £95 Yes
Melton Mowbray BS 01664 414141 3.35% for term 75% £99 Yes
Code:
*K- Operated by Internet, Telephone, or Post
*F - Fixed
*P - Operated by Post
*B - Operated by Post/Telephone
*T - Operated by Telephone
*W - Operated by Internet
*H - Operated by Internet/Telephone
*S - Available only to those aged 50 or over
*R - Available to those aged 60 and over.
:: Source: Money£acts - Tel: 01603 476 476 (All rates subject to change without notice).
In fact, LSL's share price forged ahead and still is today, despite talk of gloom and doom. When the Sharesave scheme matured earlier this summer, each share cost £2.82, so employees who had saved the maximum £250 per month over the three years saw £9,000 turned into more than £22,000, if they sold their shares on the earliest possible date.
If they kept their shares, they are even richer. This week, LSL Property Services shares changed hands around £3, and could presumably go higher if the housing market returns, as it must do one day to the heights of the last boom.
Last month, it was the turn of Asda workers to clean up: a £49 million payout to 14,700 employees on the maturity of a three-year Sharesave scheme operated by the parent company, US giant Walmart, means somebody who saved £50 a month collected more than £3,300 - some £1,400 more than their original investment of £1,920.
Sarah Dickins, policy director at Asda, says: "This is the third consecutive year our colleagues have enjoyed a record Sharesave payout.
"They drive the long-term success of our business. With a 70% increase on the money they invested for this year's payout, I am delighted many of our employees are reaping the rewards of their hard work."
Earlier this month, retail chain Sports Direct reported profits for the year ending in April of just more than £200 million, and an £88 million payout under its bonus share scheme, which means 2,200 staff in its shops, warehouses and head office will land an average of £44,000 each.
These payouts are all the more valuable because they come at a dire time for family finances.
But perhaps the biggest attraction is that in many cases, a fat profit is secured with no risk whatever. If the share price has gone down during the specified saving period, Sharesave applicants can take their money back, plus a cash bonus, and let their option lapse.
Phil Hall, head of ifs ProShare, which promotes the benefits of these schemes, says: "There are four approved schemes to help workers share the benefits of successful companies, the most popular are the all-employee share schemes, Save As You Earn (SAYE) and Share Incentive Plan (SIP).
"The SAYE Sharesave scheme started in 1980, and the Share Incentive Plan started in 2000, which drip-feeds shares to employees on a monthly basis.
"They are available to millions of employees working from top to bottom in an organisation: checkout operators at supermarkets, bank cashiers, gas and electricity workers and many, many others.
"They also include many senior executives. For example, at Centrica, and many other FTSE 100 companies, the chief executive participates in an all-employee share plan. This sends a strong message to other employees about the importance and value of saving."
Ifs ProShare research shows that 79 FTSE 100 companies operate them, along with more than 150 of FTSE 250 firm.
In many cases, share options are offered at a discount of up to 20% on the existing market price when the scheme starts, to enhance the prospect of eventual success.
"They are obviously helpful to workers", he says, "but employers see benefits too. They improve productivity, and give employees a feeling they are part of their business."
More than one million workers are enrolled in Sharesave schemes, and a slightly smaller number in Share Incentive Plans.
Now unbiased.co.uk, a website designed to match consumers with local financial advisers, warns that workers who fail to use tax-efficient share schemes could miss out on tax breaks worth £152 million this year alone.
The figure is based on the calculation that there are currently 13,135 companies running tax-advantaged employee share schemes in the UK, which give employees returns free of income tax and National Insurance.
Karen Barrett, chief executive of unbiased.co.uk, says, "Share Incentive Plans are a great way of being tax efficient, and an increasing number of companies are offering them each year.
"While various share savings options existed before the Share Incentive Plan, not all employees in a company could benefit from them.
"Employees should make the most of this tax-saving opportunity, and an independent financial adviser can help you decide whether a Share Incentive Plan suits your own financial circumstances.
"An independent financial adviser can give you advice on the most suitable investment and savings products on the market."
According to unbiased.co.uk, there are particular attractions to the Share Incentive Plan, described by HM Revenue & Customs as "the most tax-advantaged all-employee share scheme ever introduced into the UK."
Employers buy up to £1,500 of 'partnership shares' from pre-tax monthly salary or weekly wages, and firms can give up to two free 'matching shares' for each partnership share which an employee buys.
If they keep their shares in the scheme for five years, employees pay no income tax or National Insurance Contributions on profits made on their sale, though there may be a tax liability when employees take their shares out of the scheme after three years.
When they go into a share scheme, employees should obviously be sure that their monthly income is enough to allow regular donation. If they fail to keep up payments, they are dropped from the scheme.
They should also avoid having too large a proportion of their savings tied up in their own company.
Many employees at Northern Rock and Enron, the US giant, suffered devastating losses running into thousands of pounds when most of their savings were held in their companies which suddenly collapsed.
There is one other loophole with approved employee share plans: employees holding share options can lose out.
If companies are taken over by private equity, share options are cancelled without compensation. Any money paid in to that point is returned.
Workers at the high street giants Boots and Debenhams lost out in this way when private equity firms took over both companies, but they were exceptions to the general rule.
In most cases, most employees who build a shareholding in their own company have little reason to regret signing up, even when stock markets are in dull phases like we have in London at present.
:: Information: ifs ProShare (020 7444 7141 and www.ifsproshare.org)
Poundnotes
:: More than 10,000 people in the first week snapped up Barclaycard Platinum cards which offers 0% interest on balance transfers for a record 24 months, with an approval made, on average, every minute. The offer is available for a limited period.
Besides the two-year interest-free period, applicants through barclaycard.co.uk enjoy an exclusive discount of £20 off the 2.8% handling fee, if they transfer £3,000 or more. That means a customer transferring £3,000 effectively pays a low 2.1% fee.
Barclaycard Platinum also offers 0% on purchases for three months, and typical APR of 17.9%, variable.
A new Barclaycard Platinum customer transferring £3,000 from a rival charging 18.9% saves £935 in interest payments over 24 months. Direct applicants to barclaycard.co.uk get an additional £20 discount on their balance transfer fee, paying £64 instead of £84.
Enquiries: 0844 811 9111 and www.barclaycard.co.uk.
:: Sales of equity release plans to over-60s keen to unlock money from bricks and mortar climbed by up to 5% in the first half of 2011, confirming the ongoing recovery in the market after three years of decline, says Key Retirement Solutions.
The specialist financial adviser says there's £197 million of untapped cash still to be withdrawn. It says the average initial drawdown release was £28,174 in the six months but the total amount available was £53,328, and the average loan overall was £44,314.
Some 10,448 plans were sold in the first half of 2011 - about 5% higher than the 9,928 in the first half of 2010. Equity released amounted to £463 million against £449.1 million in the same period of 2010.
The proportion of customers using some or all of the cash for home or garden improvements was virtually unchanged at 59% compared with 2010, but those using it to pay for holidays fell from 36% in 2010 to 31% this year. The proportion using it to clear mortgages rose slightly from 17% in 2010 to 20%.
Dean Mirfin, Key Retirement Solutions, says: "The significant fact which the industry has overlooked is that drawdown has changed the market forever - there is £19 7million from the first half of this year alone, which has yet to be used, which if factored into total sales would take us back to the 2006 peak levels of lending when single, higher, advance business was more prolific.
"Total lending inclusive of drawdown facility is £660 million for the first six months of this year."
Nationwide, eight of 12 regions saw growth in the total number of plans and seven of 12 regions saw total lending grow.
:: If you want to lock your money away in a fixed rate bond, act fast. The length of time a fixed rate bond is on the market has fallen to 37 days, the lowest level since December 2008, says Moneyfacts.co.uk.
Since base rate hit an all time low of 0.50%, the average length of time bonds have hung around for has typically been more than 100 days, peaking at 133 days in October 2009.
Michelle Slade, Moneyfacts.co.uk spokesperson, says: "In recent months, a downward trend for bond rates resulted in savers rushing to secure best deals.
"Once a few providers cut rates, others follow suit as no provider wants to pay more than necessary to attract savers' money.
"Money market rates are now notably lower than they were a few months ago and providers are probably using this to raise money for their lending rather than through their savings book.
Savers actively seek the best deal, and market-leading deals are launched and rapidly oversubscribed."
:: Metro Bank celebrates one year on Britain's high streets this week, and says "thank you" with a MasterCard rate for all existing and new customers of 0% for 12 months on purchases, balance transfers and cash advances.
Customers need a Metro Bank current account to be eligible for the exclusive offer. A 3% handling fee applies to balance transfers on new credit card applications but no charge on balance transfers to customers with existing credit cards. You can transfer balances to a Metro Bank credit card up to 75% of its limit.
:: High five savers
Phone No Rate Account Period Deposit Interest paid
Whiteaway Laidlaw Bank 0845 266 6611 4.75% Fixed Term Deposit 1 Five Year Bond £5,000 Yly
Birmingham Midshires 0845 602 2828 4.65% (F) Fixed Rate Bond Five years £1 Yly
Santander 0800 234 6065 3.30% Flexible ISA Issue 3 Instant £1 Yly
Coventry BS www.thecoventry.co.uk 3.10% Poppy Online Saver None £1 Yly
Aldermore 0845 604 2678 3.10% 90 Day Notice
90 Days £1,000 Mly
:: Top five borrowers
Phone No Rate Period Max% Adv Fee Incentive
HSBC 0800 494999 2.59% variable for term 60% Yes
Mkt Harboro BS 01858 412250 2.65% for three years 75% £195 Yes
First Direct 0845 610 0100 2.79% variable for term 65% £199 Yes
Yorkshire BS 0845 120 0874 2.79% to 30/09/13 75% £95 Yes
Melton Mowbray BS 01664 414141 3.35% for term 75% £99 Yes
Code:
*K- Operated by Internet, Telephone, or Post
*F - Fixed
*P - Operated by Post
*B - Operated by Post/Telephone
*T - Operated by Telephone
*W - Operated by Internet
*H - Operated by Internet/Telephone
*S - Available only to those aged 50 or over
*R - Available to those aged 60 and over.
:: Source: Money£acts - Tel: 01603 476 476 (All rates subject to change without notice).
© 2012 Press Association