Prior to 2008, plan sponsors could find one of two types of providers in the nonqualified deferred compensation (NQDC) market: specialists, that offer deep NQDC-specific expertise, and generalists, that offer NQDC administration as a convenient add-on to their qualified plan business.
Since then, the market has become more blended, with the emergence of “hybrid” organizations capable of delivering on both value propositions. Today, the market is almost evenly split, with hybrid organizations totaling more assets/participants and specialists retaining more plans, which may explain why only 10% of the overall market bundles NQDC plans with other services.
According to the 2018 PLANSPONSOR Recordkeeping Survey, the top five NQDC plan providers by number of participants are Fidelity Investments, Transamerica, Newport Group, Prudential Retirement and Alight Solutions (formerly part of Aon). The top five by total number of Section 409A NQDC plans are The Pangburn Group, NFP, Fidelity Investments, Newport Group and Prudential Retirement.“Although they are small, NQDC plans can be an important but complex benefit for high-income employees/executives, so finding a provider capable of delivering the right combination of knowledge, administration, funding strategies and participant education is no less important than decisions related to larger, more common plan types,” says Brian O’Keefe, director – Research and Surveys, PLANSPONSOR/PLANADVISER.