Transcript Equiniti presentation template user guide

Impact of SIP and SAYE
limit changes
Was it really worth all the fuss?
Presented by Phil Ainsley and
Jennifer Rudman
Making complex things simple
Introduction
Phil Ainsley
Director, Employee Services
Overall responsibility for Employee Share Plans and Benefits Administration.
Role encompasses all Equiniti’s employee benefit solutions that include equity
reward administration alongside Flexible Benefits and Total Reward
Communication
Jennifer Rudman
Strategic Development Manager, All Employee Share Plans
Overall responsibility for defining Equiniti’s all employee share plan strategy and
enhancing its employee share plan services
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Presentation coverage
Impact of SIP and SAYE limit changes
Small ripple or big splash?
After waiting 23 years for Sharesave
savings limits to change and 14 years
for SIP, was it really worth all the fuss?
Small ripple or big splash?
Outcome and trends
The session will look at what changes
were expected using feedback gathered
from an earlier survey and comparing this
with the reality of what has happened
since April, analysing investment levels to
show outcomes and trends
Drawing on a variety of company case
studies, we’ll show how changes were
implemented, specific impacts felt and
what we expect from SAYE and SIP going
forward
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Limit change
Last increase to SAYE limit was in September 1991
SIP has retained its monetary limits since its introduction in 2000
Changes in April 2014
SAYE
The maximum
monthly amount
which can be
saved doubled
from £250 to
£500
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SIP Partnership
Shares
The amount of
savings which an
employee can
make for
Partnership
shares each tax
year increased
from £1,500 to
£1,800 (or to
£150 a month)
SIP Matching
Shares
The amount of
Matching shares
is linked to the
amount of
Partnership
shares (max 2:1)
so increased from
£3,000 to £3,600
SIP Free Shares
The amount of
Free shares which
an employee can
receive in a tax
year rose from
£3,000 to £3,600
SAYE limit increase
Analysis of SAYE launches since April 2014
Launches and maximum savings limit used
30
25
20
15
10
5
0
£250
5
£300 to £400
£500
SAYE limit change
• Survey showed 54% of
companies intended to
increase the monthly
savings limit to £500
• 6 companies delayed their
‘usual’ launch date so the
higher limit could be used
• 26 of the 30 companies that
completed SAYE invitations
between 6 April and August
2014 increased their savings
limit (87%)
• 24 of the 30 companies
increased to £500 (80%)
SAYE limit analysis
Analysis of 24 company launches where £500
maximum limit offered
Percentage of employees saving £250 or above
2014
2013
0%
6
5%
10%
15%
20%
25%
30%
35%
40%
45%
Increase in savings
• Survey showed companies
believed that the biggest
impact would be an increase
in take-up and investment
• The proportion of
employees saving £250 or
more has increased by 7%
• Across all 30 company
launches there are now
23,285 employees saving
more than £250 month
SAYE limit increase
Case study - BT
About BT
• World’s leading providers of
•
•
•
7
communications services and solutions
Customers in more than 170 countries
For the year ended 31 March 2014,
reported revenue was £18,287m with
reported profit before taxation of
£2,312m
Employees in 61 countries, 87,800 fulltime equivalents (72,200 of them
based in the UK)
BT case study
Interviewing Francis O’Mahony, Head of Employee Share Plans and Share Registration
What limit was chosen?
The limit was increased to £300 for this launch, but may
increase next year
What discussions took place in the company to get agreement to
changing the limits?
This was debated in full by the company’s Operating Committee
– including impact on accounting cost as well as benefits to
employees
What feedback did you get from employees?
About time the limits changed! Great that there has been an
increase, but a pity the company didn’t offer the statutory
maximum in one go
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Any feedback from payroll on changing
the limits in their systems?
There were no significant issues for payroll
What changes did you see with take-up
rates, and average savings?
Overall take-up increased by 9% to
71%, average monthly savings are now
£190, with 35% of employees saving
more than £250. As well as the increase
in savings limits, the success of this year’s
maturity has also had an impact
What would you like to see re limits going
forward?
It would be good to see savings limits
linked to inflationary measures
SAYE limit increase
Combination of factors impacting
SAYE
•
•
•
•
•
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Increase in savings limit
Increase in market share values
Maturity gains
Bonus rates
Employment and confidence
23,285
employees
already saving
over £250 a
month
SIP Partnership limit increase
Analysis of SIPs to August 2014
Changing savings limits
Plan limit changes
Survey
Survey showed 88% of
companies intended to increase
the monthly savings limit to £150
SIP limit change to August
Unchanged
(48%)
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SIP Partnership
limits
Increased
limit (52%)
Of the 29 companies changing
limits all have increased the
limit to £150 per month
SIP Partnership limit increase
Analysis of 29 companies that have increased
partnership limits
Percentage of employees saving £125 or above
Increase in savings
• The proportion of
August
June
February
26%
11
27%
28%
29%
30%
31%
32%
33%
employees saving £125 or
more has increased by 4%
to 32%
• Savings level:
• Less than £125 = 68%
• £125 = 12%
• £126 to £150 = 20%
• 11,237 employees are
now saving more than
£125 per month
The Rathbone SIP example
Impact of change
Both the overall number of participants increased
as well as the proportion of employees saving £125
or more
Company opinion
'The company has always been in
favour of SIP and provides both
Free and Matching shares. The
change was discussed at the
executive committee meeting
with the increase in savings limit
regarded as a positive step.
Having introduced the change, it
is currently thought that the
limits are now set at about the
right level.’
Richard Loader
Company Secretary
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11% = £125
57% = over
£125
Total 68%
By July, 6%
increase in
participants
February
2014
65% of
participants
saving £125
Increase in
limits to
£150
SIP limit increase
Case study – United Utilities
About United Utilities
• Manage and operate water and
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•
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wastewater assets in the North West
3 million households and 200,000
businesses
5,500 employees from the top of
Cumbria down to Cheshire covering a
whole variety of roles from financial
assistants and engineers to technicians
sorting out water flow blockages
United Utilities case study
Interviewing Bernadette Kilroy, Share Schemes Manager, United Utilities
What discussions took place in the company to get agreement to
increase the SIP Partnership limit?
There is already a policy aim to encourage employees to hold
shares and ShareBuy is key. Ever since the limit change was
announced last Autumn, there has been support to increase
savings levels from the CEO, the board and the Reward team
How was the change communicated to employees?
We used this as an opportunity to rebrand and relaunch
ShareBuy. We worked with the Reward team to include the plan
within the benefits package ‘MORE for you’. A campaign was run
throughout March and April to raise awareness of the plan and
encourage employees to take advantage of the limit increase
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How did employees react to the change?
They were pleased with the change and
impressed with our proactive approach
with the communication campaign
What changes did you see with take-up
rates and savings levels?
By May, overall take-up had increased by
15% with 47% of participants investing
more than £125 in August
Would you like to see limits going up again
in the future?
With employees being able to use online
services to change their savings limits the
process is now straight forward and future
increases would be welcomed
SIP limit increase
Combination of factors impacting SIP
• 14 of the plans have Matching shares
• 1 has introduced a cap on the amount of
matching
• Others currently in planning
• 7 Trust Deed and Rules needed updating
• Scheduling of changes balanced with
•
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other company tasks
Waiting agreement to relaunch
11,237
employees
already saving
over £125 a
month
Small ripple or big splash?