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.  

More insights from the 2012 study are available at www.principal.com/nqresearch.