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Money Management Executive

Total Collapse of WorldCom Would Hardly Put a Dent in Nation's 401(k)s, Pension Plans

July 12, 2002, 1:00 a.m. EDT 1 Min Read

Even if WorldCom totally collapsed, it would not have harmed the nation’s 401(k) savings and pension plans, according to the Employee Benefit Research Institute (EBRI). Of the $3.7 trillion held in stocks in 401(k)s and pension plans, if these plans had owned all of the outstanding $41.5 billion in WorldCom stock last fall, it would have represented only 1.1% of their assets, according to EBRI.

Likewise, of the $1.5 trillion that 401(k)s and pension plans hold in bonds, if these plans had owned all of the $38 billion in WorldCom bonds, it would have represented 2.5% of their bond holdings.

Some defined contribution and defined benefit plans had large absolute dollars invested in WorldCom, noted EBRI President and CEO Dallas Salisbury. However, in context of total pension assets, were a firm of the size of WorldCom to totally fail, it would not harm the overall 401(k) and pension system, Salisbury said.

Unlike Enron, WorldCom did not require employees to match their 401(k) company matching funds in company stock, Salisbury added.

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