Workplace 401(k) retirement savings plans play an important role in recruiting and retaining employees but not nearly to the same degree as nonqualified deferred compensation plans do. That’s according to a survey from Morgan Stanley shared exclusively with Pensions & Investments.
Nearly 3 in 5 employers (59%) view NQDC plans as having “high impact” in employee acquisition, retention and satisfaction, compared with just 38% that said the same about traditional 401(k) and other defined contribution plans, the survey found.
NQDC plans allow senior-level employees to set aside retirement money on a tax-deferred basis beyond what they’re allowed with their 401(k) plans.
“Our recent survey of 200 plan sponsors shows that nonqualified deferred compensation plans have emerged as powerful tools in companies’ efforts to provide well-rounded and differentiated benefit offerings,” said Scott Whatley, head of Morgan Stanley at Work, in the survey report.
Employers estimate that 57% of eligible employees on average take advantage of NQDC plans, with usage perceived to be greater among men. Three in 10 said men are more likely to participate in the plans. Only 4% said women are more likely to be plan users. Two-thirds said it made no difference.
Most employers (82%) agreed that dedicated reps from the NQDC provider are either critical or valuable to helping employees get the most out of the plans. Most also said NQDC plan education as well as plan advice and guidance are critical or valuable in driving plan participation.
The survey was conducted in September by research firm 8 Acre Perspective. The 200 survey respondents were employee benefit influencers or decision-makers at companies offering NQDC plans.
