Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.
Data & Research September 15, 2010
ESOP Companies Contribute More to Employee Savings
New research finds the average ESOP participant has 20% more defined contribution assets than the average participant in a non-ESOP DC plan, and far less comes out of the employee’s pocket.
Reported by Rebecca Moore
The National Center for Employee Ownership (NCEO) reviewed Form 5500 data of 3,976 ESOP companies (representing 38% of all ESOPs by NCEO estimates) the NCEO estimates the average ESOP participant in the average ESOP company has $55,836 in combined DC plans, compared with $50,525 for participants in non-ESOP companies with at least one DC plan. More than half of companies that offer an ESOP (56%) have a second DC plan, likely a 401(k).
According to the report, on average ESOP companies contributed 75% more to their ESOPs than other companies contributed to their primary DC plan. The average ESOP company contributed $4,443 per active participant to its ESOP in the most recently reported year, while the average non-ESOP company with a DC plan contributed $2,533 per active participant to their primary plan that year.
ESOP companies have much lower average contributions by employees than non-ESOP companies ($384 versus $2,848), and only 13% of ESOP companies report any employee contributions at all.