As growing companies strain to compete with larger organizations in recruiting, retaining, and rewarding key employees, many have yet to invest in nonqualified retirement plans, according to a study released this week by the Principal Financial Group.
The "Principal Benchmark Report: Employer Sponsored Retirement Solutions for Key Employees" said that nearly two-thirds of the companies contacted do not offer a nonqualified plan but that 7% indicated they planned to install one this year. For purposes of the study, nonqualified plans are defined contribution, defined benefit, executive bonus, split dollar life, stock appreciation rights, and stock options. These retirement vehicles were contrasted with qualified plans such as 401(k)s.
Regarding recruitment and retention, smaller companies were found to be at a disadvantage. The largest companies in the survey (those with 500 to 999 employees) were twice as likely to sponsor a nonqualified plan as the smallest companies (those with five to 99 employees), the study said.
The report looked primarily at nonqualified programs at companies with five to 999 employees. Harris Interactive did the survey of more than 1,000 companies.
Of business owners and benefits decision makers with at least one nonqualified plan, defined contribution plans were the most prevalent (at 49% of the companies); defined benefit plans came next (at 36%). Larger companies were more likely to sponsor bonus plans (18% of those with five to 99 employees and 30% of those with 500 to 999 workers).