Executive benefit strategies are shifting rapidly, and your non-qualified (NQ) plan strategy must keep pace. With expanded 401(k) limits, growing assets in NQ deferred compensation plans, and mounting executive retention pressures, now is the time to ensure your plan is more than adequate – it must be exceptional.

1. Why NQ Plans Matter Now More Than Ever

Non-qualified deferred compensation (NQDC) plans remain a cornerstone of competitive executive compensation.

Industry research shows that a majority of organizations with highly compensated employees offer an NQDC plan, with strong participation rates among eligible executives. On average, participants defer a notable portion of both base pay and bonuses—helping address retirement income gaps and supporting long-term retention.

2. Rising Demand and Strategic Complexity in 2025

Assets in NQDC plans have grown significantly over the past decade, reflecting both expanded plan adoption and increased deferral amounts.

Today’s plans are no longer “set it and forget it” – they are evolving strategic tools.

Leading sponsors are:

• Expanding eligibility beyond top executives to other key talent. These types of plans aren’t just for executives.
• Some are offering dual funding solutions such as corporate-owned life insurance (COLI) and mutual fund platforms.
• Enhancing participant education to improve engagement and perceived value.
• Strengthening governance to address regulatory and financial reporting requirements.

3. Funding and Risk Management: A Three-Part Best Practice

A well-structured NQDC plan typically aligns three critical decisions:

1. Funding Method – Whether unfunded (“pay as you go”) or supported by vehicles like mutual funds, life insurance, or other assets.
2. Hedging Strategy – How the organization offsets the liability, such as mirroring investment returns or using a mapping/discretionary approach.
3. Funding Level – Determining whether to fully fund, partially fund, or use targeted funding strategies tied to specific benefits.

This disciplined framework helps sponsors manage balance sheet risk, safeguard participant benefits, and control the long-term cost of the plan.

4. Common Gaps That Limit Plan Effectiveness

Even well-intentioned NQDC programs often fall short when:

• Funding and hedging strategies are not aligned with corporate objectives.
• Governance processes are minimal or outdated.
• Participant communication is limited, reducing perceived plan value.
• Plan provisions have not been reviewed in light of recent tax, accounting, or regulatory changes.

These gaps can create financial inefficiencies, weaken retention impact, and expose the organization to compliance or reputational risks.

5. The HUB Advantage: Precision, Clarity, and Executive Impact

At HUB, we deliver more than just plan design. We provide:

• Tailored financing funding and hedging strategies aligned with your organization’s goals and cash flow.
• Executive-ready documentation to ensure clarity and compliance.
• Participant engagement programs that improve understanding and perceived value.
• Integrated governance across your qualified and non-qualified plans.

Our approach brings clarity to complex decisions, aligns benefits strategy with retention objectives, and is backed by HUB’s national resources and fiduciary depth.

Is Your NQ Plan Truly Optimized?

Your non-qualified deferred compensation plan plays a critical role in retaining and rewarding top talent—but only if it’s aligned with today’s best practices. Use our NQ Plan Sophistication Checklist below to evaluate key areas such as funding, hedging, participant communication, and governance.

If you’d like to review your results or explore strategies to strengthen your plan, you can also schedule a 30-minute conversation with a HUB NQ specialist. We’ll walk through your checklist together and discuss ways to address any gaps you’ve identified.