is it worth buying share options for Lloyds?

Albermarle

I think if you leave employment during one of these schemes you just get your money back .
Part of the reason for offering these options is to try and reduce staff turnover.

ANDY597

Check to see if you can just take your savings at the end of the 3 year period, as opposed to exercising your option to buy the discounted shares. My previous company share save scheme allowed you to do this so worth checking.

if you can and the share price has bombed you can walk away square (aside from losing out on the interest you could have accumulated)

Assuming you could start a 3 year share save each year for the next 3 years then in theory you'd start to have a rolling investment maturing each year.

It's also worth checking whether they have a share incentive plan, opposed to the sharesave.
Example, you buy share at x price each month, company gives you x amount of free matching shares you have to keep for a set period before you can sell tax free.

Often these share incentive plans come off pre tax, hence saving you the tax. Where as you'll probably find your sharesave mentioned above comes off post tax

Worth considering whether your work has any incentives that come off pre tax, hence lowering your reference salary and saving on the taxman

Also worth considering whether or not you are paying the

ANDY597

Max into your pension and whether you can pay additional contributions

My best advice would be to see if they offer any salary sacrifice gross deductions rather than net deduction after tax which is likely your sharesave noted above.

Hope this helps.

Thrugelmir

eskbanker wrote: »

I would also take issue with the perception that Lloyds shares have been OK for growth over the past 8-9 years - anyone buying in during the big dip in the first three years would perhaps see it that way but they've been at best stagnant for the last six years and the recent reintroduction of dividends really doesn't compensate in any meaningful way:

Lloyds problems started when they bailed out HBOS without performing proper due diligence. Nor were investors informed of the Treasury loan that was keeping HBOS afloat at the time of the rights issue.

Since then PPI has been the bane of Lloyds financial issues (again predominantly from the HBOS legacy). There's a cloud hanging over Lloyds until this finally arrives at a conclusion. The share buy back policy was cancelled yesterday. In light of the the flurry of last minute PPI claims.

If the dividend is maintained though. A share to tuck away for the long term. Given the lack of yield on bond holdings. VLS60 may well struggle performance wise in the next few years. As bond yields really have no where to go currently. The 40 year bull run is over.

MarkCarnage

Little or no downside to this. I used several share schemes when I was an employee. Worst case is you get your money back (usually plus some savings bonus) at the end of the three years.

It's essentially a free call option with a 20% discount. Worst case is the opportunity cost that by saving the money elsewhere, that cash provides a better return, which it might, but you're not going to get 20% off what you buy with it.

One issue to be aware of is not to have too many eggs in the employer basket. Some sorry tales of Enron and RBS employees who had 80-90% of their net worth in their employers' equity. Company went bust, savings worthless, job lost too.....not good. However, that was people who had large option/sharesave holdings built up over many years and didn't diversify. I still hold some shares acquired via sharesave or option grants, but probably sold 80% of them over time.

user1168934

MarkCarnage wrote: »

Little or no downside to this. I used several share schemes when I was an employee. Worst case is you get your money back (usually plus some savings bonus) at the end of the three years.

It's essentially a free call option with a 20% discount. Worst case is the opportunity cost that by saving the money elsewhere, that cash provides a better return, which it might, but you're not going to get 20% off what you buy with it.

One issue to be aware of is not to have too many eggs in the employer basket. Some sorry tales of Enron and RBS employees who had 80-90% of their net worth in their employers' equity. Company went bust, savings worthless, job lost too.....not good. However, that was people who had large option/sharesave holdings built up over many years and didn't diversify. I still hold some shares acquired via sharesave or option grants, but probably sold 80% of them over time.

Thanks, very useful.
So am I correct in thinking that this money will not have any protection from any govt bodies like FSCS? i.e. it can be lost if Lloyds goes bust?

Thrugelmir

user1168934 wrote: »

Thanks, very useful.
So am I correct in thinking that this money will not have any protection from any govt bodies like FSCS? i.e. it can be lost if Lloyds goes bust?

Lloyds is highly unlikely to go bust. Banks are highly regulated and regularly stress tested. Capital balance sheet strength is constantly being improved.

MallyGirl

These are usually worth a punt. My employer only allows us to put £250 pcm in but with a year to go they are currently worth twice the option price - obviously a lot could change in a year. A previous set had risen enough that I had to give some shares to hubby to avoid capital gains. Hubby's sharesave that matures this month is making a small amount but the one that matures next year is at a loss right now. He has signed up for the next set as the share price is low so this means the option price is low. He also did a share match thing where they gave him £600 worth if he bought £600 worth.

Vortigern

LHW99 wrote: »

Would there be any issues if you should happen to want / have to leave your job before the end of the three years?

If it's like BT's sharesave schemes, there will be different rules for "good leavers" and "bad leavers." Good leavers, those leaving on redundancy or retirement, may be allowed to continue subscriptions and exercise their options. Bad leavers, those on dismissal or resignation, will get their contributions back.

user1168934 wrote: »

So am I correct in thinking that this money will not have any protection from any govt bodies like FSCS? i.e. it can be lost if Lloyds goes bust?

Your contributions will be held in a deposit account which should have the usual FSCS protection. Once you've bought the shares, you risk loss if Lloyds goes bust.

MarkCarnage

Usually the savings is held with a separate institution (Skipton BS used to specialise in running these I think), but in any event I think it is covered by FSCS as it's a savings vehicle in cash with a regulated institution.

However, it is worth checking who it's with and the T&C of it just to be on the safe side. Also worth checking what happens if you leave Lloyds employment during the term. Most will differentiate between 'good' and 'bad' leavers.