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IPSA calls for help to save employee share scheme

Save As You Earn scheme threatened by Ulster Bank’s withdrawal

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Departure: Ulster Bank is the only institution with a licence to issue new SAYE accounts. Photo: Mark Condren

Departure: Ulster Bank is the only institution with a licence to issue new SAYE accounts. Photo: Mark Condren

Irish ProShare Association (IPSA) chair Eleanor Cunningham

Irish ProShare Association (IPSA) chair Eleanor Cunningham

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Departure: Ulster Bank is the only institution with a licence to issue new SAYE accounts. Photo: Mark Condren

The Irish ProShare Association has called on the Government to ensure the future of the Revenue-backed Save As You Earn employee share scheme, which is at risk due to Ulster Bank’s decision to withdraw from Ireland.

Ulster Bank is the only bank with an Irish banking licence that accepts new accounts for Save As You Earn (SAYE) – a Revenue-backed scheme allowing employees at all levels of a company to buy shares in that firm in a tax-efficient manner. IPSA said SAYE could become unviable unless another provider is found.

IPSA estimates Ulster Bank has 6,000 SAYE account holders with savings valued at approximately €20m. It is popular among employees at companies including Cairn, Dalata and Diageo.

IPSA chair Eleanor Cunningham said Ulster Bank’s decision to exit could be the death knell for SAYE. She said IPSA had contacted the the Department of Finance to help develop solutions that could save the SAYE scheme and hopes to arrange a meeting.

“They [the Government] haven’t responded to our request for meetings or our latest email. Since the announcement of Ulster Bank exiting the market, we haven’t had any correspondence or feedback from them.”

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Irish ProShare Association (IPSA) chair Eleanor Cunningham

Irish ProShare Association (IPSA) chair Eleanor Cunningham

Irish ProShare Association (IPSA) chair Eleanor Cunningham

IPSA believes a solution for SAYE would involve An Post and the credit unions offering the accounts. The appetite among potential providers is low, however.

“Our hands are tied,” said Cunningham. “No deposit-taking organisation is interested in taking on more deposits in the interest rate environment we are in; that is why we are asking for Government support.

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“We see An Post and the credit unions as central pillars of the Irish financial landscape – well known to the Irish public. We are hoping it would be a mutually beneficial position in that they’ll be exposed to a wider customer base, have access to more funds, and from an economic perspective, the SAYE scheme can attract and retain individuals and companies in Ireland.”

IPSA believes a viable solution for saving SAYE would involve An Post and the credit unions offering the scheme’s accounts.

Cunningham said companies offering SAYE had flagged its future as a concern. Firms are trying to find an alternative way of rewarding staff, she said, with those who provide the equivalent in the UK concerned with how they can offer equal rewards to Irish workers.

With SAYE, employees can receive options to buy shares in the company they work for at a discount of up to 25pc. The employee then saves a portion of their salary every month into a SAYE account with a bank to purchase the shares when the options mature, usually three years later.

Assuming the shares’ price has risen, the employee benefits from the increase in value. No income tax or CAT is due on SAYE profits – just PRSI and USC – so it is considered tax efficient. If the price falls, the savings are returned to the savers.

Two UK lenders, Barclays bank and Yorkshire Building Society, which provided SAYE accounts were forced to withdraw from the Irish market as a result of Brexit. A ministerial order granted by the Government last autumn allows them to facilitate existing accounts to maturity but they cannot open new SAYE accounts.

Ulster Bank has said there are no changes to any of its products or services at this time and it will be in contact with customers in advance of any changes.


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