Updated executive compensation guide: Split-dollar plan growth isn’t just for CEOs

The growth of split-dollar life insurance arrangements has outpaced that of other standard components of supplemental executive benefits packages in recent years, especially strong among non-CEO executives, according to an updated report from CUNA Mutual Group.

This trend is reported in the 2021 complimentary update of “Non-Qualified Executive Benefits: A Guide for Credit Union Leadership,” available on the CUNA Mutual Group website.

The 32-page guide, originally published in 2017 by CUNA Mutual Group in collaboration with CUES, explains why and how to use deferred compensation programs to recruit, reward and retain excellent credit union leaders.

Split-dollar gaining fast on 457 plans for CEOs
The guide uses data from the 2020 CUES Credit Union Executive Compensation Survey to show trends in supplemental executive benefits product usage.

The 2020 survey shows that 457(b) and 457(f) continue to be the most used deferred compensation tool for executives overall.

One reason is that 457 plans have been available to credit unions since the late 1980s, whereas split-dollar life insurance were not available to credit unions until about 2005.

For credit union CEOS, 457 plan usage remained relatively steady at 45.3% for 457(b) and 38.5% for 457(f) in the 2020 survey. Use of these plans appears to have plateaued in recent years. However, the results show a clear increase from the 2017 to the 2020 survey in the percentage of split-dollar arrangements offered to CEOs—and to most of the other executive categories measured. Split-dollar insurance was offered to CEOs by 35.3% of surveyed credit unions—an increase of more than 37% from the 2017 survey.

In addition to an updated trends report, the guide offers a nine-step guide to creating and maintaining deferred compensation plans to suit your overall executive compensation and succession strategies. It features common scenarios of how credit unions deploy deferred compensation plans, gleaned from thousands of these programs managed by CUNA Mutual Group over many years.

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