Even if WorldCom totally collapsed, it would barely affect the nation's collective 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 the context of total pension assets, were a firm the size of WorldCom to totally fail, it would not harm the overall 401(k) and pension system, Salisbury said.