Data & Research November 6, 2007

COLI Use As NQDC Funding Vehicle Increases

Non-qualified deferred compensation (NQDC) plans continue to be widely utilized and more employers are turning to corporate-owned life insurance (COLI) to informally fund them, according to a new executive benefits plans survey by Clark Consulting.
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The use of NQDC plans is the highest it has been since the Clark survey’s 1993 inception, the release said. Among financial institutions, NQDC plan prevalence remained at 92%.

Some 56% of respondents reported making corporate matching contributions to NQDC plans. Of those respondents, 51% utilize a 401(k) restoration match formula.

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Supplemental executive retirement plan (SERP) prevalence, while lower overall, remains high among financial institutions. Some 82% of financial institutions indicated they have adopted a SERP and 67% of all responding companies reported having SERPs, continuing a downward trend from 2004’s reported high of 83%. Meanwhile, the number of respondents that administer their SERPs in-house has dropped significantly to 30% from 44% two years ago.

Plan Funding

Three quarters (74%) of respondents who informally fund their SERPs choose COLI as the funding vehicle, up from 64% in 2004. The COLI funding vehicle use showed a continued increase since its 2003 survey low.

“We have continued to see growth in the use of COLI for informally funding both SERPs and NQDC plans, especially over the past three years,” said Kurt Laning, President of Clark Consulting, in a press release. “More companies are coming to realize that this is often the best funding tool available for these key executive programs.”

TPA Use

The survey also found that due to the complexity of NQDC and SERP plan administration, more companies are choosing to utilize third-party administrators. The percentage of companies that use a combination of in-house and third party administration for their NQDC plans continues to trend upward, reaching its highest level (49%) since 1993.

The survey report is available here.

Deals & People November 6, 2007

State Street Names New Head of Strategy and Research

State Street Global Advisors (SSgA), the investment management arm of State Street Corporation, has announced that Thomas Anderson has joined its Intermediary Business Group as head of the Strategy and Research Group.
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In this role, Anderson will direct State Street’s investment management and thought leadership for the Intermediary Business Group in North America. He will oversee a team of eight research strategists dedicated to providing customized portfolio solutions to financial advisers, asset managers, registered investment advisers (RIAs), and family offices.

State Street’s Intermediary Business Group provides service to a growing client base of financial advisers, broker/dealers, RIAs, and family offices, and represents more than $160 billion in assets under management.

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Anderson most recently served as portfolio manager and investment team leader in State Street Global Advisor’s Charitable Asset Management Group (CAM) where he was responsible for setting asset allocation strategy and managing charitable gift portfolios for all CAM clients.

Prior to joining State Street in 1998, Anderson served as vice president, Marketing Services at Funds Distributor Inc., cultivating relationships with investment management firms.

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