Consumer Agenda for Retirement Security

Initiative # 3: Improve retirement savings plans 

E. Study ways of placing limits on the amount of employer stock held in 401(k) plans.

Portfolio diversification is a core element of modern portfolio theory, yet ERISA permits employees to invest up to 100 percent of their account balances in employer stock.  This defies the diversification principle in a particularly unfortunate way, since the employee’s investment capital and employment security are commonly invested.  Defined benefit plans are not permitted to hold more than 10 percent of their assets in employer stock and there is a question as to why similar limits should not be imposed on defined contribution plans.  While this issue is complex, the Department of Labor should make legislative recommendations on how to appropriately limit investments in employer stock.

Learn more about the other initiatives in the Consumer Agenda for Retirement Security.

Initiative 1: Promote a more adequate and secure private retirement income system.
Initiative 2: Empower workers to promote their own retirement security.
Initiative 3: Improve retirement savings plans.
Initiative 4: Improve traditional and hybrid pension plans.
Initiative 5: Make retirement plans fairer for workers and their spouses.

Print the Consumer Agenda for Retirement Security [PDF].