Employers that offer their senior managers nonqualified deferred compensation plans do so to stay competitive in the labor market, according to the 2024 NQDC Plan Survey from the Plan Sponsor Council of America.
More than 4 in 5 employers (85.2%) that offer NQDC plans cited having a competitive benefits package as the top reason for providing the plans, the survey found.
Other motivations included wanting to retain eligible employees (59%) and helping them accumulate assets (58.8%).
“In the current landscape, simply offering a competitive salary isn’t enough to attract top talent,” said Will Hansen, PSCA’s executive director and chief government affairs officer for the American Retirement Association, in a news release Feb. 25. “Offering a NQDC plan can differentiate the benefits package to compete for the most talented individuals in their industries to help drive company growth and objectives.”
NQDC plans allow senior-level employees to set aside retirement money beyond what is permitted in their 401(k) plans.
Most employers offering NQDC plans (80%) make contributions to the plans, with more than half (52.5%) providing a “restoration match,” money that ensures that executives receive the full match they would get in their 401(k) plans were it not for caps on employer matches.
In 2024, an average of 6.5% of total employees were eligible to participate in the supplemental retirement savings plans, in line with the 7% who were eligible last year.
Of the eligible employees, 61% opted to participate in NQDC plans, deferring an average of 10.8% of base pay and 27.4% of bonus pay.
The survey, conducted in October, is based on 159 employers that offer NQDC plans to employees.
