Nonqualified, supplemental retirement plans are usually implemented to help companies attract and retain teams of high quality executives and other key employees. Because these employees face significant limits on what they can contribute to, and receive from qualified retirement plans such as pensions and 401(k)s, supplemental, nonqualified plans usually serve as a retirement planning bridge.
The study´s key findings included the following.
- While 98 percent [1,947 of 1,993] of companies with revenues of more than $250 million offered a qualified defined benefit and/or defined contribution plan to employees, 71 percent of these companies [1,413 of 1,993] offered one or more nonqualified retirement plans to key employees.
- Larger size companies are more likely to offer nonqualified plans, though qualified plans are in place throughout companies, regardless of revenue.
- 96 percent of companies that offer an executive deferred compensation program also offer a 401(k) plan, while 84 percent of companies that offer a supplemental executive retirement plan (SERP) also provide a defined benefit pension plan.
"American businesses have long recognized that nonqualified retirement plans can be effective in helping to attract and retain key executives and employees," said Leonard Wilson, an executive benefits consultant with The Todd Organization.
"The study´s findings as well as our firm´s experience with clients and prospects in the field, shows that the vast majority of companies want to have nonqualified plans supplement, and not replace, qualified plans. This promotes parity in retirement planning," said Mr. Wilson.
A summary of the findings is illustrated on the two charts that follow.
The study information was compiled from The Todd Organization´s proprietary Executive Compensation and BenefitsTM Database (TECABS).