Company SIP

BrotherUuurgh

I have two savers with Nationwide, one for regular savings such as rounding transactions down to the nearest £10, and one which allows £200/month deposits as an emergency fund. I'm currently exploring the different options there are out there.

I've been reading over a booklet provided by my employer about their SIP - Share Incentive Plan. You can invest up to £150/month, a max of £1,800/year, and it's deducted from gross salary (salary sacrifice?). Their example is every £100 you put in would've been the equivalent of £68 in a normal savings account, so quite a head start. This is one of the things that got me interested. The second thing is again as I understand it, on maturity the withdrawal is also tax free. The third is if I need access before maturity, I can transfer to an ISA and then withdraw it to maintain the tax advantage.

Is there anyone on here who puts some of their salary into these schemes? Is there anything I might be missing? What are they good for? Bad for? I'd love to hear a bit more about this. The company has been doing very well since 2020 so a good chance to boost some savings. 

Thanks

BrotherUuurgh

@[Deleted User] - Thank you for the correction. It is quite possible the booklet is out of date. I've looked at the NI rate and that's 8% now, right? So tax savings of 28% so the £100 into SIP would otherwise be £72 after tax in a regular saving account? On the second point, is that a recent change? Is it still tax free on maturity (5 years)?

LHW99

The only thing people tend to say is to move the shares into an ISA or other account at maturity (start the next SIP scheme if you want). Otherwise you can end up with most of your money and your job going if the company did get into difficulties in future. I believe it has happened and isn't pleasant for those who suffer.

BrotherUuurgh

@LHW99 - if it makes a difference, it's done on a  monthly basis. The first month's deposit matures on the 61st month after it, second month 62nd and so on, so it would be more or less drip feeding and doing a transfer to an ISA every month - would that be a hassle? As for the company, it's top 4 in the industry so I'd hope it's still strong by the fifth year at least. It feels more risky than just a straight deposit into a S&S ISA for some reason. 

masonic

LHW99 said:

The only thing people tend to say is to move the shares into an ISA or other account at maturity (start the next SIP scheme if you want). Otherwise you can end up with most of your money and your job going if the company did get into difficulties in future. I believe it has happened and isn't pleasant for those who suffer.

Depends on the scheme. The last one I invested in paid out a tax free cash lump sum when it was triggered. There was no option to retain shares.