More employers say recruitment and retention are among the top reasons for offering nonqualified deferred compensation plans to their key employees. This according to new findings from a study of employers and their key employees conducted by Boston Research Group on behalf of the Principal Financial Group ® .
The vast majority of plan sponsors (91 percent) say nonqualified deferred compensation plans are important to provide a competitive package for recruiting employees, a 7 percentage point increase from 2011. Eighty-six percent of plan sponsors say these plans are important as a retention tool, up 8 percentage points from 2011. Key employees, those identified as most critical to the business, confirm nonqualified plans factor into employment decisions:
- 69 percent say these plans are important when making a decision to take a new job.
- 61 percent report the plans are important in their decision to stay with a current employer.
“Employers and employees alike were shaken by the economic crisis compounded by the gradual recovery and continued market volatility,” says Gary Dorton, vice president of nonqualified benefits for The Principal ®. “Employers recognize that helping employees bolster their retirement savings also makes good business sense in today’s competitive marketplace to secure top talent.”
The number of participating employees contributing $25,000 or more in nonqualified deferred compensation plans has steadily increased over the last three years, now at 44 percent in 2012. Participants also plan to save more in these plans, with one-in-three (35 percent) planning to increase their contributions in the plan over the next year. Other actions by employees surveyed:
- More than three-fourths (78 percent) report reviewing their investment allocation quarterly or more frequently.
- Just over half (53 percent) sought advice from a financial professional, yet 59 percent do not have a written plan that includes goals and sources of retirement income.