Fidelity survey highlights benefits of employee stock purchase plan for retirement savings

PROVIDENCE – Offering a stock buyback program to employees does not make them less likely to contribute to their 401(k).

In fact, workers who participate in a company employee stock purchase plan and 401(k) contribute 32% more, on average, to their retirement savings than those who only participate in a 401(k), according to new research from Fidelity Investments Inc.

Specifically, the study found that employees in both plans contribute an average of 12.5% of their salary to their 401(k) and 6.3% of their salary to their stock buyback program. In contrast, those who only contributed to a 401(k) put in an average of 8.8% of their salary.

The findings defy long-standing concerns that offering both 401(k) and employee stock purchase plan options create an “either-or” scenario in which workers choose only one savings route, according to Mark Haggerty, Fidelity’s head of stock plan services.

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Additionally, workers who take advantage of both options are also more likely to make use of financial guidance from their employers, leading to improved overall financial wellness.

Employee stock purchase plans that offer stock buybacks at a 15% discount and a “lookback option” also have higher participation rates than those with lower discounts or no lookback, the survey found.

These findings, based on 250,000 workers whose companies offered both options, held true across income levels and genders.

Nancy Lavin is a staff writer for the PBN. Contact her at Lavin@PBN.com.