save as you earn schemes

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smarty121

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just wondering if anyone has any thoughts on company save as you earn schemes whereby a certain amount is dedeucted from you salary each month over 3 or 5 years and at the end this lump sum can be used to buy the companies shares at a discounted rate. i was wondering whether to enter this scheme which is coming up at work or use the money to invest in the company pension scheme as i havent yet started a pension im 32. any advice?
 
You'd need to post more details about the specific scheme (what sort of discount, what tax treatment, what salary limits, what "get out" clauses if you choose to leave the scheme prematurely etc.) and your particular circumstances for people to comment meaningfully.

Presumably the pension would have better tax advantages? The main drawback being that you cannot access the money until retirement. Could you avail of both - e.g. benefit from the discount bonus promised by the share scheme and then put the resulting funds into a pension?
 
You may find Revenue's Savings-Related Share Option Schemes booklet of some use also;

[broken link removed]
 
Yes I have invested in such schemes over the years, My work scheme has a guaranteed minimum return built-in with no risk to capital so it's a no brainer.

As per post above ...if you can forward more details about the specific scheme then maybe myself and others here can help!
 
It mainly depends on:
a) the strike price - ie. do you get a discount to current market price?
b) what rate of interest is the savings carrier (the bank) paying if you leave the scheme after 1 year and if there are any bonus payments for staying with the scheme to full term.

A lot will depend on your co. share price - where do you see it being in 3/5/7 year's time? If you have a disounted option price and the share price does not move for 3 years then it's a no brainer - you have gained the % discount (excluding any inflation) on the total savings. Remember that worst case scenario here is that you get your savings back with maybe some interest.
Obviously putting into your pension as an avc will have advatages also, but there's nothing stopipng you doing both - eg. split what you can afford each month between your pension and an SAYE. You will always have access to SAYE proceeds at a later date if you change your mind and want to spend them, but once you've put funds into the pension you'll be waiting a while to get your hands on them....
 
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