[March 30, 2015]

MullinTBG/PlanSponsor Survey: communication and education key to executive benefits engagement

The ninth annual MullinTBG/PLANSPONSOR Executive Benefits Survey reveals plan participation rates as reported by responding companies have dropped slightly to 43 percent from 46 percent in 2013. While the barriers to participation may vary for executives, survey respondents ranked plan education and communication as the most important to potential plan participants in deciding to enroll in a nonqualified program. MullinTBG is a Prudential Financial, Inc. company (NYSE:PRU).

"Executive benefits don't accomplish their stated goals without participant engagement," said James McInnes, senior vice president, Total Retirement Solutions for Prudential Retirement. "Clear communication of plan features and education about the benefits of deferring compensation to meet financial planning goals are key drivers of plan participation and satisfaction for both participants and plan sponsors."

The survey, the longest-running of its kind, received 232 usable responses from plan sponsors who shared insights about their executive benefits offerings. As in previous years, the survey revealed a large majority of responding companies (84 percent) offer nonqualified deferred compensation plans (NQDCP) to their highly compensated employees, making it the most common executive benefit surveyed. And for those companies surveyed that offer these plans, 75 percent of them rely exclusively on a third-party record keeper to administer the plan and rank "quality of service team," "consultative in NQDCP" and "online user experience" as the top three factors they use to choose a record keeper.

"As more companies offer and improve their nonqualified programs, record keepers need to understand each plan sponsor's needs and help ensure the plans are designed in a way that keep participants engaged and increase deferral rates," says Yong Lee, chief operating officer at MullinTBG. "Whether that's by coupling these plans with financial planning benefits, which 48 percent of survey respondents already provide, or other offerings, companies must work with their providers to design executive benefits that will attract and retain valued employees and most importantly, help them realize successful outcomes for their financial future."

Other survey highlights from responding companies include:

• Criteria used for determining NQDCP eligibility varied amongst categories, with job grade (28 percent) and salary + title (20.8 percent) cited most often.
• Informal funding continues to be a popular strategy for managing NQDCP asset-to-liabilities and increased in prevalence this year to 62 percent from 57.2 percent in 2013.
• Companies are primarily using corporate-owned life insurance (54 percent) as compared to taxable securities (42 percent) or cash (19 percent) as their informal funding vehicle of choice.
• 41 percent of respondents offer a company match, which is predominantly calculated according to a fixed percent.
• 74 percent of responding plan sponsors rate their plan as either "effective" or "extremely effective" as opposed to 70 percent in last year's survey.
• Significant uptick in the percentage of respondents that reported that their NQDCP was offered "to provide a vehicle for retirement savings" in 2014-up to 85 percent from 77.8 percent in 2013.
• 58 percent of respondents that provide financial planning benefits provide them at no cost to the participant.

MullinTBG is a Prudential Financial company and one of the nation's largest providers of nonqualified executive benefits, with 850 customized plans and over $21.8 billion in total assets record kept as of December 31, 2014, representing 74,100+ corporate executives. The firm is headquartered in Los Angeles (El Segundo) and has regional offices in Chicago, Dallas, Irvine, New York and Orlando. For more information, please go to www.mullintbg.com.

Prudential Retirement delivers retirement plan solutions for public, private, and nonprofit organizations. Services include defined contribution, defined benefit and non-qualified deferred compensation record keeping, administrative services, investment management, comprehensive employee education and communications, and trustee services, as well as a variety of products and strategies, including institutional investment and income products, pension risk transfer solutions and structured settlement services. With over 85 years of retirement experience, Prudential Retirement helps meet the needs of 4.0 million participants and annuitants. Prudential Retirement has $363.8 billion in retirement account values as of December 31, 2014. Retirement products and services are provided by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, CT, or its affiliates.

Prudential Financial, Inc. (NYSE: PRU), a financial services leader with more than $1 trillion of assets under management as of December 31, 2014, has operations in the United States, Asia, Europe, and Latin America. Prudential's diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. In the U.S., Prudential's iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit www.news.prudential.com.

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