Vanguard Study: Fewer Companies Offering Company Stock in Retirement Plans

In December, Vanguard released a study of 1,152 companies for which it provided administration services and found that the number of plan sponsors offering company stock fell from 11% in December 2005 to 8% in June 2014. The data includes defined contribution plans and consolidates all plans offered by a single company. The study reported that a major driver of this decrease was companies changing the design of their plans, with about one-third of company stock funds being eliminated or closed to new money over that period. Although 8% of companies still have company stock in their plans, only 6% of companies still actively offer company stock as an investment option.

The report also found that fewer participants were choosing company stock: in 2005, 66% of participants who were offered company stock held such stock. That percentage has steadily declined, and Vanguard reports that it is 53% in 2014. Participants also are diversifying more. The percentage of participants with company stock concentrations over 20% of plan assets fell from 17% in 2005 to 8% in 2014.

The report also notes that "Company stock plans tend to be more generous and well-funded than non-company-stock plans. Median account balances are higher in company stock plans, as are median employee and employer contributions." These higher value reflect the increased likelihood of employer contributions in connection with company stock plans. The report also notes that 67% of company stock plans allow immediate diversification of employer contributions.