An industry-leading benchmark study of non-qualified deferred compensation (NQDC) plans finds a shift in emphasis for what has become an increasingly critical benefit for key employees.
Employers have long provided access to NQDC plans to their management team and certain highly-compensated employees. Participants value the unique tax preferences and wealth accumulation opportunities available through a NQDC plan. However, the survey – conducted by the Plan Sponsor Council of America – found that the goal of offering a plan to employees seems to have shifted from attraction and retention of top talent to helping employees save more for retirement.
That was among the key findings of the Plan Sponsor Council of America (PSCA) 2019 Non-Qualified Deferred Compensation Plan Survey, a follow-up to its 2018 study. The survey facilitates dialogue within the industry while providing insight into common and best practices of deferred compensation plans. PSCA is part of the American Retirement Association (ARA).
The survey of NQDC plan sponsors – the only independent source of plan benchmarking data on NQDC plans for sponsors and advisors – generated 162 responses from a diverse group of employers, including 127 organizations that currently sponsor an account-balance NQDC plan for executives. The respondents represent a wide variety of industries, including a significant number of large employers, those with more than 5,000 employees.
The survey found that on average, 5% of employees are eligible to participate in the NQDC plan, and about half of those that are eligible to participate do so. Perhaps not surprisingly, organizations that provide a non-matching contribution experience much higher rates of participation – approximately 63% – compared with organizations with no employer contribution, where participation rates fall below 30%.
Despite the value of NQDC plans in change-of-control situations, 40% of survey respondents say they do not have a prudent process in place in the event of a merger or acquisition.
The full survey is available for purchase at https://www.psca.org/2019NQDC_report. For more information, contact Hattie Greenan at [email protected].
NQDC Insights
Interested in knowing/doing more with NQDC plans? Just ask anyone who attended last year’s sold-out NAPA Nonqualified Plan Advisor Conference, and they’ll tell you that a nonqualified plan focus can take your practice to the next level with sessions covering topics most requested by advisors, including:
- Starting (and Ending) a Successful Executive Benefits Conversation
- Compensation Models (I am a Fiduciary – How Do I Get Paid?)
- Market Trends (Things Continue to Evolve)
More than that – there are some intriguing shifts in emphasis for these programs among plan sponsors. First-time attendees will be entered in a lottery to win a FREE copy of the Plan Sponsor Council of America’s NQDC Survey Report – a $520 value!
NEW TO THE NQDC SPACE? – or simply want to hone your current expertise? Check out the “bootcamp” opportunity to earn the new NAPA NQDC certificate, just ahead of the NQPA conference.
Consolidation, fee compression, litigation, regulation – it’s tough “out there” – and getting tougher every day to stand out.
Looks like another sold-out event is shaping up – so join us in Chicago, Sept. 15-17, for the 2019 NAPA Nonqualified Plan Advisor Conference. Early bird pricing expires SOON!
Find out more at http://bit.ly/2OW6Mte
