Deducting and then investing money for employees

grey_gym_sock

suspicious people might wonder whether the employer has enough money to pay their salaries in full, and whether it's really being invested as stated. that may be unfair. but employees are already financially dependent on their employer, so there is a lot to be said for not increasing that dependence unnecessarily.

the best way to alleviate those concerns, and make it clearly above-board, would be to do this by partnering with some external, well-established provider of investments. (though i still don't think it would be a very attractive offer.)

that would also presumably avoid the need for the company to do be FCA authorized, or other complex regulatory requirements, since the partner would have that covered.

greenglide

So who would determine how the money would be invested?

The employer? Surely not.

Each employee separately? How would they decide, who would advise them?

A single fund set up by the company to invest money as they see fit? What happens when it makes a loss?

What is the benefit of this scheme to either the employee and the employer? I can see this becoming a lose / lose situation.

jimjames

TheElite wrote: »

They could invest themselves if they really wanted to. It's just an option for them that we could make available.

Plus, they may want some gains this year (however small) rather than waiting for a pension to start paying out when they're in their sixties.

Why not speak to a provider such as HL (expensive but likely to be more interested as a result) who would provide information to employees about their products, maybe at a discount, so employees can choose to invest? My employer offers various staff options as a perk, this could be similar.

Anything where the company chooses funds for a S&S ISA and handles the money seems a recipe for mis-selling claims later down the road and headaches for the company.

steampowered

This does not sound like a good idea to me.

If your employees want to invest, they can easily do so themselves. In fact from a tax point of view they are better off doing it themselves through a stocks and shares ISA.

If you want to encourage your employees to invest, I would be tempted to just give them a link to a self-service platform which allows them to do so. Perhaps you could offer basic financial advice from an authorised adviser as an employee benefit.

If you offer the scheme yourself you are creating a legal risk if the investment performs poorly and your employees claim that you encouraged/advised them inappropriately. You would presumably have a disclaimer which says you are offering an 'execution-only' service, but even that doesn't protect you entirely (https://www.moneymarketing.co.uk/fca-warning-over-execution-only-services/).

coyrls

What exactly is the benefit for employees who sign up?

aroominyork

I would make sure your employees understand about AVCs and leave it there.

PS Do you plan to tell them this is a way to get some "gains this year"?

bigadaj

aroominyork wrote: »

I would make sure your employees understand about AVCs and leave it there.

Wouldn't have thought that AVCs would be applicable or relevant in this case.

bigadaj

I wonder if this was an option open to employees at Madoff inc?

aroominyork

bigadaj wrote: »

Wouldn't have thought that AVCs would be applicable or relevant in this case.

Why not? The OP wants to encourage/offer people a way to save at no cost to the firm. If the employees are not already in a pension scheme they should start there and not with an ISA. If they are in the pension scheme, surely an AVC is the best way to save more if they are to do it through the firm.

bostonerimus

The existing pension is the best and most obvious way for employees to invest more.....so additional contributions from either employer, employee or both.