Majority of ESOP Sponsors Offer another Retirement Plan

Approximately 90% of ESOP Association members surveyed reported having retirement savings plans in addition to the ESOP (employee stock ownership plan) including 401(k) plans, pension plans, stock purchase plans, and stock options. 

The survey by the ESOP Association and the Employee Ownership Foundation found 23% of respondents said the ESOP was created to provide an additional employee benefit, and another 21% stated the attraction of the employee ownership concept as the reason. Eighty-four percent of respondents agreed that the ESOP improved motivation and productivity.   

The survey also found 78% of companies advertise the fact that they are employee owned through Web sites, in company literature, and in marketing campaigns, according to a press release.  

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In 2010, the average age of the ESOP was reported to be 15 years as opposed to prior surveys in which the ESOPs reporting were much younger.  In addition, the average account balance has risen dramatically to $195,222.65.  

The top reason for establishing an ESOP has not changed over the last decade, with 50% of the respondents reporting that their ESOPs were created as part of an exit strategy, or a buyout from current owners.   

The figure for the amount of stock held by the ESOP has increased dramatically to 78% in 2010, up 10% over the 2005 survey data, and up 12% compared to the 2000 data.  The number of currently leveraged ESOPs has decreased with 52% of companies reporting that they are not currently leveraged and have paid off ESOP debt.  This reflects the increasing age of the ESOP as most ESOP loans are a 7-12 year term, the press release said.   

The survey is conducted every five years and 460 members participated in 2010. A publication detailing all 45 questions and responses will be available for purchase by members and non-members in the fall of 2010. 

Survey Finds Gen Y in Trouble Financially

Many of the more than 87 million Americans age 18-34, popularly known as “Gen Y” are in financial trouble, according to survey results just released by Western Union. 

The latest Western Union Money Mindset Index, a national survey of 3,000 consumers, finds nearly 30% of Gen Yers report having difficulty in managing their spending, more than 20% wait longer to pay their bills, and 35% have borrowed money from friends or family members.   

According to a press release, half of Gen Y respondents reported feeling increased stress about financial obligations in the last six months, and more than one in three say their financial situation has worsened in the last six months.   

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About 27% of Gen Y survey participants have been turned down for a loan or line of credit. Sixty percent have not seen their credit score in the past year, and 44% have never seen their credit score.  

Gen Y’s difficulties are in contrast to other survey respondents, many of whom are seeing positive changes in their financial situation including less impact from economic challenges such as changes in credit card limits and increased interest rates, a declining need for spending cutbacks, and decreased shopping at “discount” retailers.  

“The silver lining is that, in spite of the difficult economy, Gen Y is engaging in money-savvy behaviors that can help build a better financial future,” said David Shapiro, senior vice president, Western Union, in the press release. “The Money Mindset Index identified Gen Y’s use of tools such as online bill pay to manage their budget and credit standing. Factor in their high comfort level with web-based programs and budgeting tools, and Gen Y has a solid foundation for getting their finances back on track.” 

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