IPSA has said Finance Minister Paschal Donohoe needs to implement urgent measures to ensure that SAYE and KEEP employee share ownership schemes remain viable.
The call for action comes in the IPSA Budget submission, which highlights issues that both schemes are facing and warns that both schemes are at risk unless the Government acts.
IPSA Vice Chair Gemma Jacobsen said: “We are calling for support to be shown for the SAYE scheme, by working to replace the departing Ulster Bank as the sole Irish-licensed bank acting as savings carrier to SAYE or introduce an alternative medium for savings.
“SAYEs are used mostly by larger companies. We also need to show support for SMEs. Irish SMEs have endured a tough and testing past year. We are calling for clarity and the simplification of legislation surrounding the KEEP scheme to assist them in their recovery.”
The IPSA submission notes the precarious position Save As You Earn (SAYE) is in due to the withdrawal of Ulster Bank from the Irish market, which will leave the scheme with no Irish-licensed bank acting as a savings carrier to facilitate the scheme. It is not yet clear whether Ulster Bank will remain in the Irish market long enough to see out the approximately 6,000 SAYE accounts, with savings valued at around €20m, that it currently has on its books.
If another qualifying savings institution is not prepared to support SAYE then IPSA wants the Government to consider legislation that would either facilitate savings via one of the State savings schemes or allow employing companies hold the funds on behalf of employees.
The submission criticised the Key Employee Engagement Program (KEEP) for its lack of usability. It highlights that the Covid-19 crisis continues to affect Irish SMEs, and how their ability to offer equity in a tax efficient manner to staff is an invaluable tool in helping them survive.
The Key Employee Engagement Program (KEEP) was designed to help SMEs attract and retain talent but has been blighted by poor take-up. IPSA’s submission criticises it as being too complicated for its target audience and calls for changes to reduce onerous qualifying restrictions and limitations, difficulties navigating the scheme, and costs associated with establishing KEEP.
The submission states: “The lack of usability as well as ambiguity associated with certain aspects of KEEP is a contributing factor to the poor uptake of the scheme nationwide. It is clear that significant reform is needed to make KEEP easily understood and implemented by SMEs, which can be used to assist in the recovery of businesses around Ireland following the Covid-19 crisis.”
The IPSA submission also calls on the Government to amend existing company and tax legislation to facilitate share buy-backs in Irish companies and ensure that long options are only be taxed when excised instead of when granted. Such a move would bring Ireland into line with most other jurisdictions and make share incentive schemes more appealing to employees.