Holdings in Company Stock Continue to Fall

According to data from the 2006 Employee Benefit Research Institute/Investment Company Institute Participant-Directed Retirement Plan Data Collection Project, the percentage of 401(k) assets held in company stock declined to 11.1% in 2006, down from 13% in 2005 and a peak of 19% in 1999. Not all plans offer company stock, however. In just those plans that do, the percentage of holdings in company stock is 21.1%. Very little company stock is held in companies with fewer than 1,000 employees, but 15.4% of all 401(k) assets in companies with more than 5,000 employees are held in company stock.

Newer employees are less likely to invest in company stock. Just 9.3% invested in company stock in 2006, compared to a peak of 23.6% in 1999, when companies were more likely to require employees to hold company stock in their 401(k) accounts. Where company stock is offered as part of a retirement plan, only 15.5% of employees invest more than half their assets in company stock.

The data are based on information from almost 54,000 plans managed by members of the Investment Company Institute, covering 20 million participants.