A consultant’s recent survey of employers found that 82% use nonqualified defined contribution plans, and 90% offer supplemental executive retirement plans.

The survey by Clark Consulting L.L.C., Dallas, found NQDC plans are more likely than SERPs to be informally funded, such as through insurance or annuities. Among employers responding to the survey, 71% reported informally funding their NQDC plans; and 45% reported informally funding their SERPs.

Corporate-owned or trust-owned life insurance is the most commonly used informal funding vehicle for both types of plans. Clark found that 56% of respondents informally funding their NQDC plans and 100% of those informally funding their SERPs use COLI-TOLI.

Respondents prefer third-party or combined (in-house and third-party) administration, especially for NQDC plans (only 18% are administered exclusively in-house). Among SERPs, 60% are administered by a third-party or through a combined arrangement. These preferences may reflect a need for more sophisticated administration in light of Internal Revenue Code requirements, notes Clark, a unit of Aegon N.V., the Hague, Netherlands. Although the dismal economy over the past 2 years has affected executive benefits, employers continue to be aware of the value of strong, well-funded nonqualified benefits plans, Clark said.

“In this environment it might be tempting to freeze or scale down executive benefits, but generally that is seen as a shortsighted approach,” said Kurt Laning, president of Clark Consulting L.L.C., Dallas. “We feel that the companies that will emerge the strongest from the current turbulence and in the best position to take advantage of the recovery are those with the strongest leadership and teams. So it’s crucial for employers to constantly recruit, reward and retain talented executives.”