Employee Retention with NQDC Plan Funded by PFLI
Innovating Employee Retention: NQDC Plan Funded by PFLI
Introduction
This case study examines how XYZ Corporation implemented a Non-Qualified Deferred Compensation (NQDC) Plan, funded by Premium Financed Life Insurance (PFLI), to retain and reward their key executives.
Key Objectives:
- To offer competitive compensation packages to key employees.
- To enhance employee retention and motivation without straining current cash reserves.
The Challenge
XYZ Corporation faced difficulties in retaining their top executive talent due to the highly competitive nature of the tech industry. They needed an innovative compensation solution that was financially feasible and appealing to their executives.
The Solution
Strategy Overview:
We developed a PFLI-funded NQDC plan tailored to XYZ Corporation’s needs. The process involved:
- Plan Design: Crafting a deferred compensation plan that was attractive to executives and aligned with the company’s financial planning.
- Policy Financing: Using financed life insurance policies to fund the NQDC plan, providing a cost-effective way to offer substantial future benefits.
- Implementation and Communication: Implementing the plan seamlessly within the company and communicating its benefits to the executives.
The Results
The strategy yielded significant benefits:
- Enhanced Retention: The company successfully retained its key executives, who were incentivized by the lucrative deferred compensation plan.
- Financial Prudence: The plan was structured in a way that minimized immediate financial impact on the company.
- Increased Employee Satisfaction: The executives appreciated the value of the NQDC plan, boosting their loyalty and commitment to the company.
Conclusion
XYZ Corporation’s experience illustrates the effectiveness of using a PFLI-funded NQDC plan as a tool for employee retention and motivation, offering a strategic solution for businesses in competitive markets.
