The story never seems to go away: Workers and retirees with large concentrations of their own employers’ stock in retirement portfolios get hammered when share prices plunge. The most recent example is the share price collapse of  General Electric(GE), which has sparked media coverage of the damage to employees holding the stock. You might wonder–will we ever learn our lesson on the need for diversification in retirement portfolios?

But tales of corporate meltdowns such as Enron’s actually have had a healthy effect on the retirement landscape in recent years. Changes in federal law have encouraged retirement plans to move away from company stock ownership, and a spate of lawsuits also have helped convince plan sponsors to reduce or eliminate the practice.

The latest data from Vanguard–not yet published–points to an encouraging trend. In 2017, among all account-holders in defined contribution plans administered by the mutual fund giant, 90% had no investments in their employer’s shares, either because it was not offered (76%) or they chose not to invest in it (14%); 5% had holdings ranging from 1%  to 20% of their plan assets, and 5% had concentrated employee stock positions exceeding 20%.

The industries still most likely to offer company stock were agriculture/mining and construction (13% offered), Vanguard data shows. High concentrations tend to be found in industries that have shifted from legacy defined benefit to defined contribution plans, notes Jean Young, a senior research analyst with the Vanguard Center for Retirement Research. Contributions of employer stock were seen as an extra benefit, but not central to the employee’s retirement plan.  “401(k)s originally were seen as supplemental to a pension plan, and a number of companies that still have concentrations in employer stock also still have a defined benefit plan accruing,” she says.

General Electric fits that profile. As The Wall Street Journal noted in a story on retired GE workers, roughly 600,000 have traditional pensions–although the plan has the largest unfunded obligation of any S&P 500 companies. Meanwhile, the collapse in GE’s stock market value is twice as large as what vanished when Enron collapsed in 2001. But outlier stories like GE belie a sharp improvement in retirement plan diversification over the past decade. As recently as 2007, nearly 25% of Vanguard-administered plans had employer stock concentration levels higher than 20%. “We have seen a trend–it is improving” says Young. “It’s not where we’d ideally like to see it, but it continues to improve every year.”

Young also notes that employees are not being compensated for the higher risk associated with lack of diversification–that is, if the risk is higher, the reward also should be greater. But there’s no guarantee of higher return in the stock of an employer.”You can argue whether it’s good for people, even in a supplemental saving plan,” she says. “But you’re not being compensated for single-stock risk.”

Employees and retirees often feel a sense of comfort owning employer shares, notes David Blanchett, head of retirement research for Morningstar Investment Management. “You’ll often find a belief among employees that their employer’s stock is the right investment to own; that belief persists because people think they know it’s safe. But people thought General Electric was safe.”

Holding company stock runs counter to best practices in retirement-portfolio construction, due to the outsize risk. Indeed, Blanchett’s research finds that the stock of companies with high allocations to their own stock in a 401(k) plan tended to underperform their peers on a relative performance and risk-adjusted basis. Moreover, Vanguard research shows that concentrated stock positions tend to displace investments in diversified equity funds and other balanced funds. Overall equity allocations also tend to be higher.

Read more at MorningStar