Executive Benefits for Credit Unions

Using executive benefits to strengthen succession planning

Executive benefits, or nonqualified benefit plans, are an effective tool for credit unions to retain and reward their key leaders. Nonqualified plans are employer-sponsored retirement savings arrangements that operate outside the strict rules and regulations defined by the IRS for qualified plans. Nonqualified plans are designed to provide key employees with additional compensation and retirement benefits.

Succession planning is critical to helping ensure your credit union's leadership continuity. By developing, nurturing and strengthening your leadership pipeline, you can help avoid management disruptions, untimely and unscheduled departures, and morale issues.

The two plans credit unions use most are split dollar plans and 457(f) plans

Split dollar plans are considered long-term retention plans because they're used as a retirement benefit. The credit union makes a loan to the executive, who buys a life insurance policy with two components:

• The first creates a fund from which the executive borrows tax-free to supplement retirement income.
• The second provides death proceeds that repay the credit union its loan plus interest and provides additional key-person coverage and a tax-free death benefit to the beneficiary.

In a 457(f) plan, the credit union pays a benefit if the executive remains employed until a stated date. The plan has a predictable expense schedule. The vesting and benefit payments can be customized to support your retention and reward strategy. Some or all of the benefit expense can be recovered with optional investments.

Comprehensive servicing for new and existing programs

Our in-house coordination team is dedicated to guiding participants through the underwriting process. We have relationships with all the national carriers to advocate on behalf of our clients for better outcomes, and we can recommend alternative products.

Annual review meetings allow for one-on-one time to explain plan performance to the participant and the board, as well as to provide mitigation strategies if necessary.

We developed our internal servicing infrastructure to successfully manage the long-term nature, complexity and client impact of executive benefit plans.

• Customized solutions: Design customized executive benefits programs that align with the credit union's strategic goals and retention objectives.
• Competitive benchmarking: Conduct market analysis to benchmark executive benefits against industry standards and competitors. Help ensure that executive benefits packages are competitive and attractive to key talent.
• Executive life insurance and disability plans: Offer executive life insurance and disability plans to provide financial confidence. Customize plans to meet the specific needs of executive leadership.
• Nonqualified plans: Create nonqualified plans to offer additional benefits beyond traditional qualified retirement plans. Provide flexibility in plan design to meet the distinctive needs of executives.

• Use industry-specific salary surveys and data to help ensure competitive pay structures.
• Develop tailored compensation strategies that align with the credit union's goals and objectives.
• Help ensure strategies support talent attraction, retention and motivation.
• Design performance-based incentive and bonus plans to drive employee performance and organizational success.

First introduced in 2007, this annual survey was created to better understand the compensation and benefits offered to credit union executives. Data is organized by 12 asset ranges, from less than $25 million to more than $5 billion in assets.

• Total compensation by asset size
• Nonqualified benefit plans
• Bonus targets and metrics
• Perquisites
• Demographics
• Board expenses

Learn more about the Executive Compensation and Benefits Survey, which participants receive at no cost.