ESCA: Study Finds S ESOPs Total Return Beats S&P 500 by 62%

WASHINGTON, March 31, 2015 /PRNewswire-USNewswire/ -- New data compiled by EY's Quantitative Economics and Statistics (QUEST) practice, shows that private employee stock ownership retirement plans (S corporation ESOPs) outperformed the S&P 500 Total Returns Index in terms of total return per participant by an impressively large margin (62%), net assets increased over 300%, and distributions to participants totaled nearly $30 billion from 2002 to 2012.   

The EY study found that the total return for S ESOP participants from 2002 through 2012 was $99,000 for an 11.5% compound annual growth rate, 62% percent higher than the S&P 500 Total Returns Index's 7.1% growth rate over the same period.  Distributions to plan participants totaled nearly $30 billion in the same ten-year period, and paid significantly more benefits per participant than 401(k)s. 

In addition, the analysis indicates net assets held in S ESOPs were 318% higher in 2012 than 2002, and the number of participants with account balances rose 165% from 240,000 in 2002 to 650,000 in 2012.

"This striking new study confirms what our members know from direct experience," commented ESCA Chairman Steve Smith, Vice President-General Counsel of Amsted Industries.  "They know first-hand that S ESOPs are providing secure retirements for their workers and economic benefits to their communities.  These compelling findings—showing strong and continuing growth in net assets, distributions, average account balances, and number of participants with accounts—make that even more apparent.  S ESOPs are a model for how to make retirement security a reality for the broad American middle class."

Across the U.S., employees own thousands of private businesses through Employee Stock Ownership Plans (ESOPs), a type of defined contribution retirement plan.  The vast majority of these companies are majority or wholly employee-owned. 

Since their establishment by Congress in the late 1990s, S corporation ESOPs have been generating economic activity, creating jobs, and promoting retirement savings.  These companies have been a bright spot in an economy recently characterized by sluggish growth, anemic job creation, and worker insecurity.

Bipartisan legislation is scheduled to be introduced in both the House and Senate to encourage more private companies to convert to ESOPs.

The Employee-Owned S Corporations of America ("ESCA") is the Washington, DC voice for employee-owned S corporations.  ESCA's mission is to preserve and protect S corporation ESOPs and the benefits they provide to the employees who own them.  For more information, go to www.esca.us.

SOURCE Employee-Owned S Corporations of America

Related Links

http://www.esca.us