New Department of Labor Data on ESOPs

The Department of Labor has released its annual report on employee benefit plans, including employee stock ownership plans (ESOPs). The release is based on filings from "5500" forms that plans with 100 or more participants must file annually and plans with fewer than 100 participants file every three years. Based on these filings, the DOL concluded that in 1993 there were 9,226 ESOPs with 7,568,000 participants and $214 billion in assets. Companies contributed $14.3 billion to the plans in 1993, or $1,885 per participant. The 1993 data are the most recent available.

While the numbers are useful, they may also be misleading. For instance, some companies may have more than one plan and, in rare cases, employees may participate in more than one plan. Second, some plans neglect to file, even though they are required to do so. These would be mostly small employers, however. Third, because companies with under 100 participants only file every three years, plans set up in smaller employers in the two years prior to the 1993 filing date would generally not be included. Fourth, some companies that are technically not ESOPs, but function much like them, are often not included. Because of all these problems, when we did a small sample of the 5500 data a few years ago, we found many companies not included on the list as ESOPs even though they either actually had formal plans or had plans they called ESOPs.

While these problems make the numbers less useful than they might be, they primarily affect smaller plans. That means the number of ESOPs is more seriously underestimated than the number of plan participants or plan assets.

Altogether, the total plan assets in defined benefit and defined contributions plans in 1993 came to $2.3 trillion, meaning ESOPs now comprise about 10% of all retirement plan assets.