Work­ers sell­ing shares

Employee Benefit News - - RE:INVENT RETIREMENT - BY PAULA AVEN GLADYCH

FA­VOR­ABLE STOCK MAR­KET con­di­tions en­cour­aged 50% of em­ploy­ees who have ac­cess to an em­ployee stock pur­chase pro­gram at work to sell all of their shares over a three-year pe­riod end­ing in 2016, ac­cord­ing to re­search by Fi­delity In­vest­ments.

The num­ber of em­ploy­ees who held all of their shares dropped to 43%.

“Com­pany stock plans are in­creas­ingly viewed as a top em­ployee ben­e­fit and can play an im­por­tant role in an em­ployee’s over­all fi­nan­cial health,” says Mark Hag­gerty, head of stock plan ser­vices at Fi­delity In­vest­ments. “Em­ploy­ees of­ten use th­ese plans as a sav­ings ve­hi­cle along­side their 401(k), but money from an ESPP can be used to ad­dress short-term ex­penses and fi­nan­cial needs and help work­ers avoid the need to tap their 401(k).”

Fi­delity an­a­lyzed 365,000 work­ers over a three-year pe­riod to see how they man­aged their stock pur­chased through an ESPP. It found that those un­der the age of 40 or who re­ceive a sig­nif­i­cant dis­count on their stock pur­chases are more likely to sell off their shares. Older em­ploy­ees were more likely to hold onto their shares, but Fi­delity no­ticed an up­ward trend of those be­tween the ages of 50 and 60 who sold all their stock dur­ing that three-year time frame.

What are em­ploy­ees us­ing that money for? Ac­cord­ing to Fi­delity: 34% of them were us­ing it to pay down debt; 17% were us­ing it to make home im­prove­ments or pur­chase real es­tate; and 11% used it to es­tab­lish an emer­gency fund. Nearly 20% of those sur­veyed rein­vested their pro­ceeds from the ESPP into a mu­tual fund or their re­tire­ment sav­ings ac­count.

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