ESSUM34180 - Linkage to Savings (Arrangement): Bonuses and interest
Bonus rates are expressed as the number of monthly contributions comprised in the standard (3 or 5 year) and maximum (7 year) bonuses respectively.
If the savings contract is completed and the 36 or 60 monthly contributions made, the employee is entitled to a bonus equivalent to the specified number of monthly contributions referred to in the relevant prospectus.
If the contributions are repaid after 5 years, or 3 years in the case of a 3 year contract, a standard bonus is payable.
If employees who have entered into the 5 year contract choose to leave their contributions in their accounts for 2 additional years, they are entitled to a maximum bonus at that point, although no further contributions can be made during this additional period.
If application for repayment is made before the 3 or 5 year point, the employee is not entitled to any bonus, but is entitled to interest as follows:
|
Repayment before first anniversary |
No interest |
|
Repayment in years 2-3 inclusive |
Interest at relevant % pa for a 3year contract |
|
Repayment in years 2-5 inclusive |
Interest at relevant % pa for a 5year contract |
The relevant percentage rate of interest is specified in each prospectus, the interest rate for the December 2008 prospectus is 2%. Details of interest & bonus rates for the current prospectus can be found at ESSUM34195.
If, in the case of a five year contract, application for repayment is made between the fifth and seventh anniversaries of the first contribution, the employee is entitled to the standard bonus plus interest at the relevant percentage per annum for the period after the 5 year point.
Bonuses and interest received are not taxable (Section 702 ITTOIA 2005).
