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Benefits September 15, 2010
ESOP Companies Contribute More to Employee Savings
September 15, 2010 (PLANSPONSOR.com) – New research from the National Center for Employee Ownership (NCEO) finds the average ESOP participant has 20% more defined contribution (DC) assets than the average participant in a non-ESOP DC plan, and far less of it comes out of the employee’s pocket.
Reported by Rebecca Moore
After reviewing 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.
The NCEO report is here.