A Comprehensive Look at Trends In NQDC | Nonqualified Deferred Compensation

October 25, 2018

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Fulcrum Partners has released a report that includes valued insights on the statistics and trends in deferred comp plans through the lens of both plan sponsors and participants. The information, much of it contained in graphs is based on research from the 10th annual nonqualified deferred compensation plan study conducted by Principal® Plan sponsors will find these insights helpful in benchmarking benefits.

Consider these top reasons that NQDC plans are valued, both by employers and by employees:

Employers Value NQDC Plans

  1. Competing in the battle for key talent. The top two features that companies rank as most important are the ability to compete in the battle for key talent and to give those employees a way to save in excess of qualified plan limits.
  2. Employer contributions are important, though optional. Over half (53%) of employers choose to make contributions to key employees’ plans. Retaining key employees and restoring the company’s qualified plan contributions are the leading reasons why employers choose to make contributions.
  3. Decision-making resources are valued. Information about investment performance and plan options are what employers find most valuable in helping key employees make plan decisions. Over the next year, employers say their most likely plan change will be to offer different investment options, followed by expanding the number of eligible employees.
  4. Plan design matters. Most employers annually review design elements to help ensure the benefit is still meeting organizational needs.

Employees Value NQDC Plans

  1. It’s still about saving for retirement. The ability of deferred comp plans to help key employees save for retirement continues to be the most important role of the plan and a main reason for participating.
  2. Retirement income source. Half of participants view the plan as a source of income to be spent down during the early years of retirement. More than 20% of participants say that the plan will provide 25% or more of their retirement income. One in ten participants view the plan as their number one retirement income source.
  3. Flexibility in deciding how much to defer. The top factors key employees consider when determining an annual compensation amount to defer into the plan are progress toward saving goals, personal tax rates, and current income needs.
  4. Contributions from employers drive behavior. In 2017, 40% of participants say their employers make discretionary contributions on their behalf. And more than eight in 10 participants with an employer-match contribute enough to get the maximum match.

You can read the full report on the Fulcrum Partners Alliance page or click here to view or download as a PDF. Trends in Nonqualified Deferred Compensation


Top Reasons Why Organizations Offer Deferred Comp Plans:

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Securities offered through Valmark Securities, Inc. Member FINRA, SIPC, 130 Springside Drive, Akron, OH 44333-2431, Tel: 1-800-765-5201. Investment Advisory Services offered through Valmark Advisers, Inc., which is a SEC Registered Investment Advisor. Fulcrum Partners LLC is a separate entity from Valmark Securities, Inc. and Valmark Advisers, Inc.


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