More Employers Say NQDC Helps with Retention

The vast majority of plan sponsors (91%) say nonqualified deferred compensation plans are important to provide a competitive package for recruiting employees, a seven percentage point increase from 2011, according to findings from a study of employers and their key employees conducted by Boston Research Group on behalf of the Principal Financial Group. Eighty-six percent of plan sponsors say these plans are important as a retention tool, up eight percentage points from 2011.   

Key employees confirm nonqualified plans factor into employment decisions; 69% say these plans are important when making a decision to take a new job, and 61% report the plans are important in their decision to stay with a current employer.  

The number of participating employees contributing $25,000 or more to nonqualified deferred compensation plans has steadily increased over the last three years, at 44% in 2012. Participants also plan to save more in these plans, with one-in-three (35%) planning to increase their contributions in the plan over the next year.   

The research also found more than three-fourths (78%) of key employees report reviewing their investment allocation quarterly or more frequently. More than half (53%) sought advice from a financial professional, yet 59% do not have a written plan that includes goals and sources of retirement income. Nearly nine in 10 key employees say nonqualified deferred compensation plans are important in reaching retirement goals.