Deals & People March 31, 2014

Scott Davison Named CEO of OneAmerica

J. Scott Davison will begin serving as chief executive officer for the companies of OneAmerica on April 1.
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A 28-year industry veteran, Davison has held various leadership roles in his 14 years at OneAmerica including chief financial officer, executive vice president and, most recently, president since August 2013.

Under Davison’s leadership, OneAmerica has plans to grow assets under administration from a record $36.4 billion in 2013 to $50 billion in three years. To achieve this milestone, the company will add up to 50 staff positions in 2014, grow its sales force and invest more than $100 million in new technology and service capabilities in next three years.

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Davison tells PLANADVISER large pieces of this growth will be in its retirement business.  “We’ll be hiring field sales professionals, expanding our distribution footprint, and investing more in technology and services,” he says. Davison points out that even though OneAmerica ranked number two in service with Boston Research Group, “we still think we can be better.”

OneAmerica has been in the retirement business for more than 51 years, and it is one of the firm’s two largest businesses, Davison notes. “We think there’s a huge opportunity in this business due to the retirement gap, and we intend to grow and be aggressive,” he says.

According to Davison, One America plans to grow all lines of its retirement business, including the nonprofit retirement business, “which is a big focus and a business we like.” He adds, “We will continue to push our broad product portfolio. We are an open architecture platform for everything from 401(k), to 457s, defined benefit and ESOPs.” OneAmerica has also recently entered the pension risk transfer business (see “OneAmerica Joins Pension Buy-Out Marketplace”).

Davison steps into the role of CEO following Dayton Molendorp’s retirement on March 31. Molendorp remains the non-executive chairman of the board of OneAmerica and its parent company American United Mutual Insurance Holding Company.

Data & Research March 31, 2014

NQDC Plans See Higher Participation in 2013

Thirty percent of respondents to a recent survey note a higher plan participation rate for nonqualified deferred compensation (NQDC) plans.
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According to the eighth annual MullinTBG/PLANSPONSOR Executive Benefits Survey, there was a 10.5% increase in enrollment figures. The survey also shows, for 2013, 19% of respondents noted higher deferral amounts, and similar to previous survey results, participation rates were highest (56%) for firms that offered a company match.

The survey also reveals almost all companies (95%) offer NQDC plans to their highly compensated employees, making it the most common executive benefit surveyed. In 2012, roughly 90% of responding companies said they offered a NQDC plan.

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“With NQDC plan prevalence at such a high, there is no doubt that these executive benefits are crucial to recruiting and retaining high-quality employees,” says George Castineiras, Prudential Retirement’s senior vice president of Total Retirement Solutions, based in Hartford, Connecticut.

The survey also found about 42% of responding companies aspire to make changes to their NQDC plans in the future, hoping to enhance plan education and communication programs. According to the survey authors, education and communications are important, and key stakeholders—such as plan sponsors, plan administrators, financial advisers and benefits consultants—should focus on conveying the more meaningful underlying benefits of the NQDC plan.

The survey report says participants need to be guided through the process of achieving their financial goals—whether it’s a short-term goal such as putting their child through college or a long-term goal such as retiring to a comfortable house on the golf course—in order to make the process of saving more tangible for them.

“Providing expert resources that can help participants validate their plan choices and create a financial plan that will enable them to achieve a successful, comfortable retirement is one way to take some of the guesswork out of decisionmaking and realize the potential of their executive benefit packages,” says Yong Lee, chief operating officer at MullinTBG, based in El Segundo, California.

Nearly half (45%) of companies reported offering a financial planning advice component for their plan participants. “In-plan offerings designed to support executives’ retirement readiness are a notable trend,” Lee adds. “Offering model or managed portfolios, retirement income-generating options and financial planning advice demonstrate that plan sponsors are responding to concerns about their employees’ retirement readiness.”

Nearly all (94.7%) of survey respondents note that voluntary NQDC plans remain a relevant and integral part of the executive benefits package. On related note, the survey also reveals an increase in the use of stock options as an executive benefit in 2013, up to 50% versus 41.5% in 2012. In addition, larger, public and tax-paying companies saw an increase in the use of restricted stock units as an executive benefit, up to 57.6% versus 43.4% in 2012.

In terms of the number of investment options, the survey finds that companies like to keep them at a “diverse but reasonable level,” with the majority of respondents (82.4%) saying their company offers up to 20 options in their NQDC plan.

Other survey findings include:

  • Criteria used for determining NQDC plan eligibility varied among categories, with title (23.5%) and job grade (23%) cited most often;
  • Informal funding continues to be a popular strategy for managing NQDCP asset-to-liabilities (57.2%), with companies primarily utilizing corporate-owned life insurance (46.2%) and mutual funds (44.7%);
  • Rabbi trusts (i.e., trusts created for supporting the nonqualified benefit obligations of employers to their employees) maintain their position as the top choice for a security vehicle, employed by 97% of respondents that have a security vehicle for their NQDC plan;
  • More than two-thirds of companies (70%) rely exclusively on a third-party recordkeeper to administer their NQDC plan;
  • About 70% of plan sponsors rated their plan as either “effective” or “extremely effective”; and
  • More than three-quarters (77.8%) of respondents reported their NQDC plan is offered to “provide a vehicle for retirement savings.”

MullinTBG is a Prudential Financial company and a provider of nonqualified executive benefits.

A summary of the survey findings can be downloaded here.

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