More than a third (37 per cent) of U.S. employers that offer a non-qualified retirement plan say attraction and retention of key talent is their No. 1 reason for offering these plans, according to a new survey by WTW.
The survey, which polled around 400 employers representing more than 7.5 million employees, found more than half (55 per cent) of respondents said they’ve made changes to their non-qualified defined benefit plan in the past two years or intend to make changes in the next two years. In comparison, 75 per cent of employers said they’ve changed their non-qualified defined contribution plans in the past two years or intend to do so in the next two years.
More than half (56 per cent) of respondents said they offer only a non-qualified DC plan, while 35 per cent said they sponsor both a non-qualified DC and DB plan.
The majority of employers said they’re focused on improving plan member experience in their DC (72 per cent) and DB plans (56 per cent). Over the next two years, DC plan sponsors said they intend to focus on improving communication (52 per cent), education (47 per cent) and financial counselling (28 per cent).
Sixty per cent of DC plan sponsors and 43 per cent of DB plan sponsors said they offer mutual funds as their main investment vehicle.
Among employers that offer a non-qualified DB plan, about a quarter (23 per cent) said they’ve taken steps to de-risk their plan or intend to de-risk in the future.
“While employers have been investing time and effort into their non-qualified plans, many recognize they aren’t getting or providing the value intended,” said Chris West, senior director and leader of the non-qualified retirement plans group at WTW, in a press release. “As a result, employers are looking to improve the employee experience through more focused communication and education as part of their redesign strategy.”