HMT changes bonus rates SAYEs

24 October 2006

HM Treasury has recently announced changes in the bonus rates for Save-As-You-Earn Share Option Schemes ("SAYE").

The new rates took effect on 1 September 2006, bringing them more or less in line with other interest rates. The new rates are as follows:

Contract Type

Bonus Rate
(previous rate in brackets)

Effective interest rate
(previous rate in brackets)

3 year

1.8 x monthly payments (1.4)

3.19% (2.49%)

5 year

5.5 x monthly payments (4.4)

3.46% (2.79%)

7 year

10.3 x monthly payments (8.4)

3.52% (2.91%)

Employees who sign up to SAYE will receive the bonus rate for the relevant contract that was in force at the time they joined the scheme. They will not be affected by future bonus rate changes.

The early leaver rate, which applies to those who withdraw their funds after 12 monthly contributions, but before the three-year anniversary, have also been adjusted as follows:

Early leaver rate

Pre-September 2006

From September 2006