Newport/PLANSPONSOR Executive Benefits Survey Reveals Latest Trends in the Nonqualified Deferred Compensation Market

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Sep 16, 2022, 10:01 ET

DRESHER, Pa., Sept. 16, 2022 /PRNewswire/ -- Ascensus—whose technology and expertise helps millions of people save for retirement, education, and healthcare—announced the results of the Newport/PLANSPONSOR Executive Benefits survey report and have found that employers are increasingly turning to nonqualified retirement plans to attract and retain key talent and senior leaders. The report can be downloaded here.

The biannual report represents the retirement industry's broadest and most comprehensive employer view of nonqualified deferred compensation (NQDC) plans, and tracks insights and trends from hundreds of the nation's leading firms.

"With easily accessible compensation data, prevalent remote work opportunities, and improved video meeting technologies, employers must evaluate benefit offerings that will attract top talent," said Mike Shannon, Newport's senior vice president, nonqualified consulting. "This year's survey revealed a fundamental shift towards offering a nonqualified plan as a critical benefit to retain key talent and attract senior leaders in today's highly competitive talent marketplace," Shannon noted.

Key findings:

The survey revealed a substantial increase in the number of nonqualified plans being implemented for small and mid-sized companies ($500 million of revenue) in order to stay competitive and ahead of the compensation and benefits curve. (50% in 2020 vs 80% now).
Plan sponsors are more often using corporate-owned life insurance (COLI) as a financing strategy due to sizable asset/liability management advantages, (63% in 2020 vs 77% now), as well as a combination of COLI and mutual funds.
Virtually all plan sponsors (91%) outsource some or all of their plan management to a third-party administrator (TPA) based on the need for a high degree of customization and flexibility as well as the IRC 409A risk mitigation required for plan recordkeeping and administration. (This is up from 86% in 2020).
Fifty-seven percent of employers are using compensation (base salary and total compensation) to determine eligibility, up from 37% in Newport's previous survey in 2020.

The questionnaire was developed jointly by PLANSPONSOR and Newport and sent to a cross-section of organizations, including PLANSPONSOR subscribers, Fortune 1000 companies, and various other l for-profit and tax-exempt companies. Data collection included responses from 350 unique companies and organizations. The report can be downloaded here.

Shannon noted that employers leverage the benchmark data from the report with executive leadership when considering plan design features. Additionally, financial advisors use the report to help their clients benchmark plans and offer insight into current market competitiveness. The value of the data is enhanced by Newport's in-depth analysis, observations, and annotations by its expert nonqualified plan consultants.

"Ascensus and Newport completed our merger in April of this year and this report represents one of the earliest examples of our ability to bring even greater insights and expertise to a broader group of clients, advisors, and partners," said David Musto, president and CEO of Ascensus. "It's just one component of our long-term commitment to the nonqualified and qualified retirement market segments and a valuable tool for employers striving to strengthen and maintain their key and leadership ranks."

About Ascensus

Ascensus is a market-leading enabler of tax-advantaged savings—providing technology, services, and expertise that help more than 15 million people save for retirement, education, and healthcare.

We are a premier savings program service provider, third-party administrator, and government savings facilitator. Our platforms, industry knowledge, and data-based insights enhance the growth and success of our partners, their clients, and savers through co-branded, private-labeled, and governmental partnerships.

Ascensus offers comprehensive qualified and nonqualified retirement plan solutions, third-party retirement plan administration, 529 education and ABLE savings program administration, health savings and COBRA administration, corporate- and bank-owned life insurance solutions, and fiduciary and total rewards services.

The company's brands include Ascensus; Newport, an Ascensus company; PAi, an Ascensus company; and FuturePlan by Ascensus. Ascensus has more than $706 billion in assets under administration and employs more than 5,600 associates as of June 30, 2022.

For more information, visit ascensus.com and newportgroup.com.

About PLANSPONSOR

PLANSPONSOR is the nation's leading authority on retirement issues and benefits programs. PLANSPONSOR provides comprehensive news and commerce services dedicated solely to helping America's retirement benefits decision makers navigate the complex world of retirement plans and benefit programs on behalf of their employees or clients. PLANSPONSOR is an Institutional Shareholder Services publication. For more information, please visit http://www.plansponsor.com.

About Institutional Shareholder Services

Founded in 1985, Institutional Shareholder Services group of companies (ISS) empowers investors and companies to build for long-term and sustainable growth by providing high-quality data, analytics and insight. ISS, which is majority owned by Deutsche Börse Group, along with Genstar Capital and ISS management, is a leading provider of corporate governance and responsible investment solutions, market intelligence, fund services, events and editorial content for institutional investors and corporations, globally.

SOURCE Ascensus