New Research on S Corporation ESOPs and Retirement SecurityDecember 3, 2018
In the face of what many are calling a retirement crisis, findings from a recent survey of S corporation ESOPs conducted by the NCEO with support from the Employee-Owned S Corporations of America (ESCA) shows the potential role ESOPs can play in addressing this crisis.
This NCEO study breaks new ground by collecting data on retirement account balances by wage and age categories that can be compared to the same categories in national data.
The survey was conducted online between January and March 2018 among members of ESCA. It resulted in data for 61,020 plan participants including 20,000 lower-wage workers and 8,000 employees nearing retirement, provided by 39 S corporation ESOP companies. Most of the companies in the survey are 100 percent owned by their employees through an ESOP.
- ESOP participants represented in this survey have more than twice the average total retirement balance of Americans nationally: $170,326 versus $80,339.
- This difference is not limited to highly paid employees: ESOP participants making less than $26,000 a year also have on average more than double the retirement savings compared to similar workers nationally.
- In the surveyed companies, the ESOP is not serving as a replacement for other retirement plans, but as a supplement: Nearly all of the respondent companies offer at least one other retirement plan in addition to the ESOP. By contrast, 32 percent of all workers in the U.S. workforce as a whole do not have access to any retirement benefits at work, and 49 percent of all workers are not participating in the plan that is available to them.