The key findings from this year鈥檚 study prove continued value and need for deferred comp plans.
Employers are facing economic concerns and employee retention issues. 62% worry about inflation, and 48% fear a recession. And 71% are focused on attracting key employees, while 61% worry about losing them. But the good news is plan sponsors and participants agree nonqualified deferred compensation can help in attracting and retaining top talent.
Those are just some of the insights from our latest deferred comp study.
Explore the findings.
Now in its 17th year, our annual deferred comp research can help you benchmark against your peers and gain valuable learnings.
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Data shows
Retention is top of mind with employers and key employees.
Plan participants say 56% of current key employees are considering phased retirement and 55% are considering changing jobs while staying in the same career.
61% of employers are concerned about losing key employees to competitors (71% are concerned with attracting key employees).
Employers say 66% say deferred comp is valuable with their retention efforts compared to 57% seeing the plan as valuable for recruiting efforts. And 63% of participants say deferred comp is important in taking a new job and 57% say it鈥檚 important to staying with their current employer.
| Ranking | Employers' actions | Employees' perceptions |
|---|---|---|
| 1 | Competitive compensation & benefits (72%) | Better/competitive pay (20%) |
| 2 | Employee engagement & culture (11%) | Better benefits (19%) |
| 3 | Work-life balance & flexibility (10%) | Bonuses (14%) |
| 4 | Professional development & growth (6%) | Doing nothing/not enough (10%) |
Data shows
The number one reason by far for key employees to participate in the plan is retirement. And 80% of plan participants say deferred comp is important in helping them reach their financial goals for retirement.
88% of participants say they plan to increase or keep their deferrals the same with 24% planning to increase their deferrals.
Participants say 59% of their employers provide employer contributions and 96% of those employees with a match contribute enough to get the maximum match.
| Ranking | Employers' actions |
|---|---|
| 1 | Save for retirement (59%) |
| 2 | Reduce my current taxable income during working years (22%) |
| 3 | Employer makes contributions I'd miss out on otherwise (15%) |
| 4 | Save for financial needs while I'm still working (4%) |
Data shows
For the fourth year in a row, the most important reason to offer deferred comp is to provide key employees with a competitive benefit package. Retention has risen in importance for the third straight, year moving up 10 points since 2022. And replacing benefits lost by IRS restriction on qualified plans dropped by 6 points since last year.
The top projected change to the plan is offering different investment options (32%), followed by expanding the number of eligible employees (28%), changing plan design to meet new objectives (23%) and allowing participants to defer more (22%).
| Ranking | Employer reasons |
|---|---|
| 1 | To provide a competitive benefits package (86%) |
| 2 | To allow participants to save in excess of qualified limits (86%) |
| 3 | To use as a retention tool (84%) |
| 4 | To help key employees manage current taxation (74%) |
| 5 | To replace benefits lost by IRS restrictions on qualified plans (64%) |
Data shows
Although worries about inflation and recession have decreased since 2023, they remain high among employers and key employees.
With inflation, the concern by key employees increases by age with Boomers having the most concern at 75%.
With possible recession, the concern by key employees is most with Millennials (66%) and Boomers (67%) and the least with Gen X (62%).
| Ranking | Continued inflation | Possible recession |
|---|---|---|
| 1 | Employers are concerned (62%) | Employers are concerned (48%) |
| 2 | Employees are concerned (72%) | Employees are concerned (64%) |
What's next?
Talk to your financial professional about incorporating鈥攐r improving鈥攁 deferred comp plan in your benefits program.
Nonqualified deferred compensation plans
Learn more about how nonqualified deferred compensation plans can help recruit, retain, reward, and retire key employees.
