Is it worth joining a company ShareSave scheme?

ses6jwg

Hello all.

Recieved some paperwork through the door relating to company sharesave scheme today.I've never taken part in one of these plans before so i am interested as to what people's views on them are.

The company I work for is A&L/ Santander (yes I am aware of the problems there are at the moment, please do not take it out on me please write to the CEO or complaints dept).

Anyway, the scheme offers to save between £5 and £250 per month tax-free into the scheme (I was thinking £30), for a 3 or 5 year term.

At the end of 5 years you get a bonus of 1.8 times the monthly contributions and after 7 years they give you 3.8 times.

You then get a the option to purcahse shares at their option price, for this year this has been set at £6.86 per share.

Does anyone have any views on these schemes?

lr1277

I worked for a tech company and at the time and the share price was doubling every year. Not knowing anything about turnover and profits or why the share price was doubling at the time etc at the time, I bought into the sharesave scheme.
Then the tech crash of 2000 hit whilst I was still saving.
By redemption time, the share price was less than the offer price so I took the money. I don't believe the share price is yet above the offer price 10 years later.

If you buy into the sharesave scheme, your future is probably tied into the share price. So if everything goes well, hunky dory. If it doesn't, you may get your money back with some 'interest'. And the company may be having a redundancy scheme at the time.

I would work out if the money you get back in 5 or 7 years would have done better in a savings account. If you want you can estimate share price growth, but don't count on it.

Admittedly some people who bought into my former company's share save scheme a couple of years before me, did very well out of it.

The scheme also forces you to save before you can spend the money as I assume the money is taken out of your pay. For some people that is a very good thing.

Just some thoughts.

opinions4u

Get in for as much as you can afford to save.

Heads you win, tails you break even.

The only concern I can see with Santander is where the shares are traded. I thought they were in Euros (currency risk) and there were one or two minor Spanish taxes which may be irritants rather than deal breakers.

But the currency risk doesn't materialise until you actually buy the shares, so that's a judgement call for 3 or 5 years time.

CLAPTON

no brainer
go for it as you have nothing to lose and maybe win a bit

molerat

Go for as much as you can afford. Over 5 years you are getting the equivalent of 1.5%* gross on your payments but can get the shares at around 15% below their current value. Yes it is a bit of a gamble but you are guaranteed to get your stake money back with interest and can end up with a good profit.
(* the figures you have quoted are incomplete and don't seem quite right to me as the options are normally 3yr, 5yr and keep the 5yr to 7yrs)

StevieJ

molerat wrote: »

Go for as much as you can afford. You are getting the equivalent of 4.15% gross on your payments but can get the shares at around 15% below their current value. Yes it is a bit of a gamble but you are guaranteed to get your stake money back with interest and can end up with a good profit.

Why is it a gamble.

Kavor

Definitely go for it.

molerat

StevieJ wrote: »

Why is it a gamble.

It is a gamble whether you make the big money as some people would promise. I have had a few over the years and about 30% have ended in withdrawing the money rather than buying the shares.

lilac_lady

As long as you can get your money back if the shares dive you should put in as much money as you can afford.

YorkshireBoy

I'd be piling in for the full £250. And if I couldn't afford it I'd be asking my parents/spouse if they wanted to 'help'.

Disclaimer: Not advice, and probably breaks the scheme rules.

loracan1

The only gamble is whether you could have got a higher interest rate elsewhere. I've got one going at the moment that'll pay about 0.8% if I don't take the shares, I've signed up for as much as I can afford (which isn't that much...but still)