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Company stock in U.S. financial participation plans — sound policy or a lottery ticket?

Author

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  • David A. Hildebrandt

    (David A. Hildebrandt is President of the International Association for Financial Participation based in Paris and is the General Counsel to the U.S. based Profit Sharing/401k Council of America (PSCA))

  • Edward Ferrigno

    (Edward Ferrigno is the Vice-President for Washington Affairs and Secretary of the Profit Sharing/401k Council of America (PSCA).)

Abstract

This article discusses the use of employer stock as the primary investment for employees’ retirement savings in U.S. tax-qualified financial participation plans. The principle U.S. government policy in support of tax-qualified financial participation plans is the promotion of an employee's accumulation of assets for retirement. For more than a century, the use of employer stock to fund financial participation plans in the U.S. has been a successful partnership for employees and employers. The recent bankruptcy of ENRON, one of the largest U.S. energy companies, has brought the debate on this issue into a new phase. The paper asks the question: Did the U.S. system fail or did ENRON plan administrators fail to follow the rules of the system?

Suggested Citation

  • David A. Hildebrandt & Edward Ferrigno, 2002. "Company stock in U.S. financial participation plans — sound policy or a lottery ticket?," Transfer: European Review of Labour and Research, , vol. 8(1), pages 87-102, February.
    • Handle: RePEc:sae:treure:v:8:y:2002:i:1:p:87-102
    DOI: 10.1177/102425890200800112
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