Free shares in Aviva for Norwich Union employees
30 March 2007
ifs ProShare, a not for profit organisation concerned with the issues of employee share ownership and financial education in the workplace, have commended Aviva for rewarding their Norwich Union employees with free shares.
Norwich Union staff have been offered £3,000 worth of free shares in parent company Aviva, which are held in trust for five years.
Fiona Downes, Head of Employee Share Ownership at ifs ProShare said, “Free shares are clearly a great incentive for employees. The actions of Aviva will ensure that employees have a nest egg that can be built on. At a time when few people are making anything like the necessary financial provisions for retirement, employee share ownership is one way of ensuring more employees do save for their futures.”
Staff can also buy additional shares in the company if they join the Aviva Share Save Scheme.
Share Save schemes, also known as Save As You Earn (SAYE) schemes, were introduced by Government in 1980 and thousands of UK companies now make use of them. SAYE schemes involve employees being given the option to buy shares at a future date at a price determined shortly before the options are granted.
The company can discount the price of the shares by up to 20% off the market value.
As Fiona Downes said, “SAYE schemes offer both the employer and employees significant benefits. For the employee it’s essentially a “no lose” situation. If the share price falls below the option price then there is no requirement to exercise the options. The employee can simply take the proceeds of his/her savings contract (plus the tax-free bonus at maturity). If the share price does rise, as it does in most cases, then even greater financial rewards will be reaped.
For the employer, the costs incurred in setting up an approved scheme are allowable as a tax deduction and the option gains of employees are deductible against corporation tax”.
