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An Advance Look at Our Compensation, Retirement and Benefits Trends Survey

Supporting a philosophy that allows an organization to differentiate themselves through incentives, non-qualified alternatives or retirement matches. Using flexible approaches for recognizing loyalty and rewarding top performers. Working with advisors on retirement programs. And continuing the trend towards high deductible health plans (HDHPs). These are just a few of the key findings of Newport’s Compensation, Retirement and Benefits (CRB) Trends Report for 2019-20.

The ninth edition of our annual survey includes responses from almost 500 organizations across several industries, including health care, manufacturing, financial services, construction and not-for-profit. Here are some key findings:

Compensation Practices 

Employers are increasingly focused on flexibility when it comes to recruiting, rewarding and retaining top performers. While median salary increase budgets remain at 3.0% for the upcoming year, the salary increase gap between the highest and lowest performers is widening, as employers reinforce desired performance and shift limited compensation budgets to high performers. Top performers received salary increases approximately double of those just meeting expectations.

The use of short- and long-term incentives with performance measures aligned with strategic objectives is increasingly popular. This has been a recurring theme over the past several years, with 9 out of 10 executives having an opportunity for an annual incentive.

Non-Qualified Deferred Compensation Plans

Thirty-three percent of organizations offer a non-qualified deferred compensation (NQDC) plan or benefit program to their employees. The survey indicates that the prevalence of NQDC plans continues to grow, particularly in sectors such as finance, banking and insurance.

The use of NQDC plans increase as the size of the company increases. For instance 74% of companies with over 1,500 employees offer these plans. When Newport Group surveyed Fortune 1000 companies, 92% of respondents indicated they have an NQDC plan and 93% of those responded that it is important to them to have an NQDC plan which is competitive with their peer companies.

Of all companies offering NQDC plans, more than half said the plans were “critical” or “very important” as a tool for executive retention and executive recruiting.

Retirement Programs

A vast majority of all employers surveyed (90%) offer a defined contribution plan. And while the cost of such plans continue to be an important criterion when choosing a retirement plan provider, the costs of investments were a secondary concern to the level and quality of service provided. 

Most plan sponsors (93%) use an advisor and just over half (58%) of those have worked with the same advisor for 5+ years. 

Health and Welfare Benefits

With employer health plan costs continuing to climb, employers still recognize the importance of offering employee group health coverage to attract and retain their workforce, with preferred provider organizations (PPOs) currently being the most widely offered and the most attractive plan to employees. The use of high deductible health plans (HDHPs) continues to increase, with 60% of our respondents now offering this as an alternative. 

Premium costs have tempered as compared to past years, with the predominant increase in the range of 4% to 8%. To manage health and welfare plan costs, an increasing number of employers reported passing on 25%-30% of those costs to employees through higher premiums or introducing higher deductible plans and/or larger co-payments among other plan design options.

For more information, be sure to register for our upcoming webinar: Compensation, Retirement and Benefits Trends. The webinar will take place on January 22, 2020. 

Newport Group, Inc. and its affiliates provide recordkeeping, plan administration, trust and custody, consulting, fiduciary consulting, insurance and brokerage services.

 

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Newport Group, Inc. and its affiliates provide recordkeeping, plan administration, trust and custody, consulting, fiduciary consulting, insurance and brokerage services. Fiduciary consulting services are provided through Newport Group Securities, Inc., an SEC-registered investment adviser and FINRA-registered broker-dealer, and InterServ, LLC, an SEC-registered investment adviser. Newport Group Securities, Inc. and InterServ, LLC are affiliates of Newport Group, Inc. All securities transactions are provided through Newport Group Securities, Inc., in its role as broker-dealer. All fiduciary consulting services are provided through the registered investment adviser. when offering variable insurance products, Newport Group Securities, Inc. acts solely in its capacity as a broker-dealer.
Trust and custody services provided by Newport Trust Company, a New Hampshire state chartered trust company and wholly owned subsidiary of Newport Group, Inc.