Asked why they offer nonqualified deferred compensation (NQDC) plans, plan sponsors responding to the 2019 NQDC Plan Report from the Plan Sponsor Council of America (PSCA) said to “have a competitive benefits package” (32.7%) followed by “to help employees accumulate assets” (22.7%).
The third choice was to “help HCEs defer the same proportion of their income as other employees” (19.1%).
PSCA notes that the percent of organizations stating that their primary goal for offering a NQDC plan is “to help employees accumulate assets” has increased by 40% in the last three years. Meanwhile, respondents who indicated their primary purpose was to offer a competitive or above-average benefits plan declined from 41.6% in 2016 to 35.4% in 2018. PSCA says this indicates a shift in focus to helping employees increase their retirement savings.
The vast majority of plan sponsors are either satisfied (48.2%) or very satisfied (30.9%) with the current structure of their NQDC plan to meet the overall objectives of the organization. PSCA says this is further proven by the fact that two-thirds of plan sponsors did not make any changes to their plan in 2018, and two-thirds said they had no plans to make changes in 2019.
The survey also found more than half of employers say they provide specific NQDC plan education to eligible participants. The most common methods used are via email communications (84.3%), enrollment kits (68.6%) and individually targeted communications (41.4%).
The 2017 annual Prudential/PLANSPONSOR Executive Benefit Survey, found that although 87% of respondents don’t plan on making any changes to their NQDC plans, of the few that are, the majority cited additions or enhancements to plan education and communication programs (52.6%).PSCA’s 2019 Non-qualified Plan Survey reports on 127 active account balance nonqualifed deferred compensation plans. The report may be purchased from here.