At the time of writing, ProShare was finalising the process of gathering feedback from its members – feedback it describes as every bit as constructive as the extensive media coverage that followed the launch of the report in May.
More flexible SIPs
One recommendation that has received particularly strong and almost universal support is a call for the Government to cut the tax-free period of share incentive plans (SIPs) from five years to three, reflecting the tendency of modern workers to move jobs far more frequently.
Employee Ownership Commission
The report also recommends that the Government should establish an Employee Ownership Commission “tasked with developing the institutional support required to widen rates of employee ownership”. This would include reviewing business access to support and advice on employee ownership, financial support and the marketing of employee share plans. The commission would also take a lead role in identifying and removing barriers to employee share ownership.
Share plans are an important tool for bolstering the financial resilience of UK households.
The tax advantages of share plans to workers are obvious, so a major concern of ProShare and the Social Market Foundation is whether some lower-paid workers are held back from participation due to a perception of affordability – something that may be further exacerbated through financial hardship triggered by the pandemic crisis. It’s this thinking that lies behind another well-received report recommendation that would see SIP rules amended to allow companies to offer free shares to lower income workers.
Another big theme is transparency. For instance, the report proposes that the Audit, Reporting and Governance Authority should require company annual reports to include information on what type of share plans are being operated, the extent to which each plan is taken up by eligible UK-based workers and the average value of employee shares.
For David Mortimer, Head of External Affairs at ProShare, the underlying message of the report is that share plans provide benefits for everyone - and that the 14 recommendations can make those benefits even more tangible and accessible.
“The lovely thing about working in this industry is the focus that everyone has on providing benefits to employees,” he says.
“Yet share plans also bring significant productivity gains to the employers that provide the plans. And as a result, shareholders benefit, and society as a whole benefits. Once we’ve had the opportunity to gather full feedback from our members, we believe we’ll be in a position to present a very strong case to the Government for changes that will bring value to everyone.”
Read the full report here, along with a recording of the launch event panel discussion hosted by Claer Barrett, Consumer Editor, Financial Times.