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The Government
should increase the maximum Save-As-You-Earn (SAYE) limit to £400
a month, says share ownership organisation, ifs ProShare.
In a letter to Chancellor Alastair Darling, dated 10 July 2008,
the organisation has highlighted the fact that the current maximum
contribution of £250 per month has not increased in line with
inflation since its implementation in 1991. Had the increases of
around two per cent per year been applied to the contribution, it
would now stand at over £400 per month.
2.3million employees currently save in a SAYE share plan, and recent
research by ifs ProShare suggests that approximately 20 per cent
of these workers are investing the maximum permitted £250
each month. At present, employees save a fixed monthly amount between
£5 and £250 over a three, five or seven year period.
ifs ProShare has also urged Darling to review the maximum SAYE contribution
limit at least every five years, reducing the likelihood of lengthy
delays in uprating occurring again. They believe this would also
provide greater certainty for the employee share plans industry.
Phil Hall, head of public affairs at ifs ProShare said: “The
Government has rightly talked of the importance of encouraging people
to save more, particularly in the current economic climate. By increasing
the amount of money employees can save in a SAYE plan, the Government
can provide a tangible example of action taken to match such rhetoric.”
Some of the weighting behind these suggestions is the recently released
Irish Finance Bill which contained provisions to increase the maximum
monthly contribution to an Irish SAYE account from €320 (around
£250) to €500 (approximately £395), effective for
contracts entered into on or after 1 February 2008.
- Pensions Age
July 2008
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