Employers wholeheartedly back nonqualified executive benefit plans, but aren’t happy with participation levels that are too low, according to a survey from retirement services firm The Newport Group.
The survey revealed, among other things, that “employers are increasingly looking for ways to strategically use nonqualified plans to better align corporate objectives with the retirement goals of their management teams.”
That’s leading sponsors to pay more attention to such items as leveraging deferred compensation from a wider range of sources and satisfying participant demand for tools to help them manage their accounts.
They’re also doing more benchmarking of plan features against their peers, and making improvements based on what they learn.
The survey, which looked at nonqualified retirement and executive benefit plans, found that sponsors are looking for ways to increase participation in nonqualified executive benefit plans, because they believe so strongly that they are “an important component of an effective compensation and benefits program,” according to Michael Shannon, Newport’s vice president of executive benefits consulting.
Shannon added that “the prevalence and perceived value of non-qualified executive benefit plans continues to be strong.”
The survey also found that plan sponsors are expanding eligibility, and expect to continue doing so. Tactics that encourage plan participation include high-quality investment choices, employer matching contributions, robust communication and education, and ease of account access.
One reason sponsors want to see an increase in the level of participation, the firm said, is that they view the plans as a critical part of their executives’ retirement readiness. Sponsors, however, feel that both they and plan participants have a way to go when it comes to understanding nonqualified executive benefit plans and their features.
To that end, sponsors intend to beef up communications and education so that executives will better appreciate the value of such plans and be more inclined to participate, as well as to increase participants’ satisfaction with their plans.