SAN FRANCISCO (7/3/14)--To keep and attract executive talent, credit unions should look to supplementing their retirement plans, a CUNA Mutual Group benefits specialist told a Wednesday breakout session at the Credit Union National Association's 2014 America's Credit Union Conference.
|"Your top talent is feeling financially vulnerable," said Bruce Bauer, CUNA Mutual Group senior executive benefits specialist. Supplemental executive retirement programs are tools credit unions can use to recruit, retain and compensate executives, Bauer told a Discovery session at the Credit Union National Association's 2014 America's Credit Union Conference Wednesday. (CUNA Mutual Group Photo)
"Jobs are opening up, executive talent is being aggressively wooed away from you, and your top talent is feeling financially vulnerable," said Bruce Bauer, senior executive benefits specialist. "Credit union executives who might retire at only 40% of their current salary may seek other employment options."
Given the restrictions on retirement plan contributions and distributions, many credit union CEOs may end up retiring at 30%-40% of their salary, even after including Social Security and 401(k) plan savings.
Non-qualified compensation options, such as supplemental executive retirement programs (SERPs), are tools credit unions can use to recruit, retain and compensate executives.
Nearly 50% of U.S. employers are challenged to fill mission-critical positions, according to a 2012 Manpower Group Talent Shortage Survey, and 63% of organizations say other companies are trying to recruit their leadership.
SERPs--which include 457(b) and 457(f) plans and split-dollar life insurance--are non-qualified retirement plans that can be coupled with a strong continuing education program to form the foundation of a solid leadership continuity program. "Maintaining your bench strength can prevent disruption in the attainment of your credit union's strategic and financial goals while providing consistency in decision making," Bauer said.
Proper due diligence is a must to analyze the risks associated with a SERP, evaluate alternatives and determine required ongoing regulatory reporting.
When developing compensation plans, Bauer recommended credit unions:
- Align compensation philosophy with their mission, organizational and financial goals;
- Encourage leadership continuity by defining a scope that addresses the CEO and key executives;
- Use peer compensation data to establish a desired level of competitiveness and include it in their overall succession plan; and
- Ensure regulatory soundness by working with a firm with a trusted long-term service commitment. Consider their ability to provide flexible designs, top products and funding options, exceptional knowledge and strong regulatory adherence.
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