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Financial Education at British American Tobacco

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Objectives of our Financial Education programme. Programme implementation ... Transfer In Specie 14,000. Savings gateway. 7,000 ISA 2006/07. 7,000 ISA 2007/08 ... – PowerPoint PPT presentation

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Title: Financial Education at British American Tobacco


1
Financial Education at British American Tobacco
Nina Crossen HR Project Manager
2
Agenda
  • Background
  • Objectives of our Financial Education programme
  • Programme implementation
  • Feedback and lessons learned
  • Whats next?

3
Background
  • Our Company
  • The worlds most international tobacco group
  • Brands sold in 180 markets
  • Approx. 1630 employees in the UK
  • Around 630 people at our headquarters in London
  • 80 management, 20 non-management

4
Background
  • The history of financial education
  • Ad-hoc financial awareness seminars
  • No identity
  • Low attendance
  • Reasons for change (end 2005)
  • 3 5 year Sharesave Schemes matured in January
    2006
  • Dramatic share price increases greater chance
    of capital gains tax liabilities
  • We wanted to help individuals achieve maximum
    potential from this benefit

5
Objectives
  • To help employees understand and maximise the
    value of their Company pay and benefits
  • To provide employees with essential financial
    knowledge at all stages of life
  • As a responsible employer, to help employees plan
    for a secure financial future
  • To raise the profile of financial education and
    increase attendance at events
  • .By implementing a comprehensive financial
    education programme available to all employees

6
Implementation
  • Stage 1 September 2005, Sharesave Maturity
  • Supplier selection
  • Seminar content approval
  • Communications
  • Targeted email invitations to Sharesave members
  • Administration managed by supplier
  • Structure

Seminar Group BAT pay Education
Clinic One-to-one BAT pay Education
Investment planning One-to-one Employee
pays Independent advice
7
Example seminar content5 Year SAYE Scenario 1
Sell, No planning
32,935
48,435 Profit 32,935 Less 8,800 CGT
Allowance Tax On 24,135 _at_40 9,654
15,500
Resultant Value 38,781
8
5 Year SAYE Scenario 2 use ISAs
32,935
48,435 Shares
Sell 34,435
15,500
Net Proceeds 28,589
Resultant Value 42,589
9
5 Year SAYE Scenario 3 Use ISAs SIPP
In Specie 14,000 Shares
32,935
Sell 12,941Shares No CGT
48,435 Shares
SIPP 27,556
Higher Rate Relief 4,960 (via Tax Return)
15,500
In Specie 21,494 Shares
NB 1 Employee will need sufficient salary to
justify contribution 2 Transfer to SIPP
will give rise to an uplift in value via basic
rate tax relief shown, and employee will
receive Higher Rate relief further through tax
return. However, the transfer of shares
into SIPP is regarded as a chargeable transfer
- hence total resultant value shown below is
53,611 after all taxes taken into consideration
Resultant Value 59,457 less 5,846 CGT Net
Value 53,611
10
How do the payouts compare?
NBScenario3 for 3 year assumes,after ISA
established, all remaining shares transferred to
SIPP as there is no CGT to pay
11
Feedback
  • 5 seminars, 44 employees (157 invited)
  • 32 requested follow-up support
  • Evaluation scores 1 (very poor) 5 (excellent)

12
Implementation contd
  • Stage 2 Full Financial Education programme
  • (October 2006)
  • General financial awareness
  • Long-term income planning
  • Planning for retirement
  • Share scheme registration
  • Share scheme maturity
  • New entrant financial awareness
  • Graduate financial awareness

13
Communications
  • Lift stickers Are your finances on the up and
    up?
  • Mirror transfers Mirror, mirror on the wall.
    Will I be the poorest of them all?
  • PC screen post-it
  • Deskdrop introductory letter
  • and calendar of events
  • Targeted email invitations

14
Feedback
  • 14 seminars, 130 employees
  • Evaluation scores 1 (very poor) 5 (excellent)
  • Plus, very positive word of mouth even from some
    usually difficult customers

15
Learnings
  • Targeted communications work well
  • Remind people of their attendance at seminars to
    avoid drop-outs
  • Capitalise on the external expertise of your
    supplier eg. make use of their logo
  • Involve your Finance, Pensions, Company
    Secretarial departments to ensure all messages
    are aligned with Company benefits and policies
  • Ensure seminar presenters are a good fit with
    your Company culture
  • Try to strike the right balance between keeping
    it simple and providing enough useful information
    (our seminars were attended by employees at all
    levels of the organisation)

16
Next steps
  • Seminars scheduled to June 2007
  • Detailed evaluation
  • Review approach for 2007/2008
  • Aim to reach those who have not yet attended any
    events
  • Keep those who have interested with updates and
    refreshed content
  • Explore online interactive tools
  • Explore potential to extend our scheme beyond
    London headquarters
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