Shares & Redundancy

Hi all,

Not sure if this may be company specific, but any general advice would be great.

We were given notice that our site will close in 18 months, as such by Dec 2016 we'll be out of a job. I'm no overly concerned at all with that aspect.

What I'm wondering is, is there a general rule of thumb about shares pre termination?

Prior to redundancy, do you get offered the shares as cash at market price, or offered the shares locked into the scheme?

If they are tax free, is it a good idea to buy more shares now, and hope the price is the same or more in 18 months, to cash in tax free?

Our company offers buy 1 get 2 free on max £40 PM, but allows upto £250pm to be bought into shares (£210 to buy single shares)

Has anyone experience of this?

If they're options - save for X years then buy the shares in the future at a predetermined date then the option normally lapses with the redundancy and you just get back the amount of cash you've saved

I've checked our wording today which confirms

(iv) Matching Share Plan

You will no longer be able to participate in the Plan after your redundancy date. Your Partnership Shares, Matching Shares and Dividend Shares will be released to you free of income tax and NIC. Please refer to the Share Plan Site for further details.


It does not specify anything about the shares being transferred, only that the value will be released free of tax & NI.

I've spoke to a few others, and I'm going to take a risk on this and I've upped my contribution here by 75%. Hoping that I can take advantage of this, although the plan does allow for a reduction to as low as £5 PM and a an increase to a maximum £250 PM.

if you are getting 3 for the price of 1 the share price will have to drop a lot for you to be out of pocket, so probably worth doing as a savings for when you are made redundant.

Do the shares have to vest I.e. You can only get them/cash them in after a certain time period? Does being made redundant change that?

Yeah it does, the 2 for 1 (I buy £40, they buy £80) comes TAX & NI free as part of the redundancy package. I'm in on the maximum for that, but have now decided to go for the maximum £250 per month.

It's a risk from the £40 to to the £250 if the share price drops, but that's just a general risk, I think the company will perform well so going in for it.

All shares over the £40 up to the £250 are also free of tax & NI!

the company value has to drop 66% for you to be out of pocket

Quote:

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Originally Posted by hxbro

the company value has to drop 66% for you to be out of pocket

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Thanks, that's what I was really looking for.

Jan 2010 we were at 263p, today we're at 485p.

I think the price will stay steady, the company is too large for it to drop that amount, so seems like a no brainer to me.

Quote:

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Originally Posted by BigBrand

I think the price will stay steady, the company is too large for it to drop that amount, so seems like a no brainer to me.

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Never believe that a company is too big for the share price to plummet....

True, it is a risk, although at 66% to drop, that seems very large.

PS It's Aviva!

Look at bp before/after the deepwater disaster, Lehman brothers in their last couple weeks, bear sterns etc. not saying you shouldn't do it (think its a good idea) but playing devils advocate