Industry Insights

Study Shows Better Retirement Plan Performance for S ESOPs

May 2015
Author:  Cara Benningfield

Cara Benningfield



Construction & Real Estate
Manufacturing & Distribution

360 E. 8th Avenue, Suite 201
P.O. Box 1196
Bowling Green, KY 42102-1196 (42101)

Bowling Green

On March 31, 2015, Employee-Owned S Corporations of America released the results of a study performed by Ernst & Young’s Quantitative Economics and Statistics practice, analyzing the contribution of S corporation employee stock ownership plans (ESOPs) to participants’ retirement security.

ESOPs have been permissible S corp shareholders since 1998. The study looked at trends in S ESOP retirement plans from 2002 to 2012. During this time, participants in S ESOPs saw average compound annual growth rates of 11.5 percent in their retirement accounts. This compares to a 7.1 percent compound annual growth rate for the S&P 500 Total Returns index over the same period. The study also showed that during that time, retirement plan distributions per participant were 56 percent higher for S ESOPs than for 401(k) plans.

The study showed that net assets and participant numbers in S ESOPs are growing substantially. The net assets held in S ESOP accounts were 318 percent higher in 2012 than in 2002, while the number of S ESOP participants increased by 165 percent over that same period.

The results of the report indicate S ESOPs have provided meaningful retirement benefits to employees in a variety of industries—in many cases, benefits more substantial than what would have been available in a company that isn’t ESOP owned. This is good news for ESOP-owned businesses and their employee owners.

For more information about this report or other issues affecting ESOPs, contact your BKD advisor.

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