Voya expands nonqualified deferred compensation offering with new ‘Business-ready’ solution for smaller-sized businesses
- None.
- None.
With the introduction of 'Business-ready,' Voya Financial is capitalizing on a clear trend towards diversified executive compensation packages. The business implications of such a move are twofold. Firstly, it broadens the firm's market reach by targeting a previously underserved segment - small businesses. By offering a simplified version of NQDC plans, Voya is likely to attract smaller employers seeking to enhance their benefits packages without the complexities that larger plans entail.
Secondly, the expansion into this niche could potentially drive revenue growth for Voya. Considering the reported 117% increase in NQDC plans sold by Voya in 2023, the market for such financial products is evidently robust. It's reasonable to infer that by simplifying the product offering, Voya could see an uptick in adoption rates among small businesses, further bolstering its market position. However, the long-term success of this strategy will depend on the ability of 'Business-ready' to meet the specific needs of its target customers and the competitive response from other players in the executive benefits space.
The nonqualified deferred compensation (NQDC) market is becoming increasingly competitive, with employers looking for ways to offer valuable benefits to attract top talent. Voya's launch of 'Business-ready' signifies an attempt to capture more of this growing market by addressing the unique retirement savings challenges of executives. This move could be seen as a strategic play to increase Voya's assets under management, as the inclusion of 21 unique asset categories provides a broad investment offering that could appeal to a diverse range of investment preferences.
From a financial perspective, the success of this product could lead to increased fee revenue from plan administration and asset management. However, it's important to monitor the cost structure associated with servicing smaller businesses, as they may present different challenges compared to larger corporations. Additionally, the integration of Voya Investment Management’s Pomona Investment Fund and the launch of NQDC distribution portfolios could enhance Voya's competitive edge by offering specialized products that may not be readily available from other providers.
The launch of 'Business-ready' by Voya addresses a critical gap in the benefits landscape for small businesses. The simplified NQDC plans could be a significant value proposition for small business employers seeking to provide competitive executive benefits without incurring the administrative burden typically associated with such plans. This could lead to better talent acquisition and retention for these employers, which is a key concern in today's tight labor market.
However, the effectiveness of such a solution will hinge on its ease of use and the perceived value by both employers and employees. While the solution promises less complexity and easier plan management, the true test will be in its implementation and the user experience. If successful, Voya could see increased loyalty and higher penetration rates within the small business sector. It's also worth noting that the evolving holistic wellness needs of Americans could drive demand for more comprehensive financial planning services, which Voya seems poised to capitalize on with its integrated approach to benefits, savings and investment solutions.
New solution, designed for small businesses, will build upon Voya’s prior success in the market as its NQDC plan growth more than doubled in 2023
“At Voya, we continue to see a growing interest in our executive benefit solutions — so much so that in 2023 we saw a
Business-ready is available to any size 409A (for-profit) company but has been designed specifically for smaller-size employers, including those with less than 400 employees. The new solution brings forward the expertise and experience of Voya’s Non-Qualified Markets team, while providing many of the core benefits of a more customized solution, including several differentiating features. These include:
- A pre-built investment lineup: Offering 21 unique asset categories, including equities, fixed income (i.e. short-/intermediate-term bonds, high yield, global) and alternatives (such as real estate) managed by Voya Investment Management. With access to more funds and fund manager support — including access to different target-dates series — participants are offered diversification without an overwhelming number of options.
- Easy implementation and administration: Providing more-streamlined plan design choices and funding options. This includes mutual funds and corporate-owned life insurance, as well as faster implementation and ongoing plan management tailored to employers on the smaller end of the market.
- Less complexity: With a focus on providing easier plan management for both employers and their participants, Business-ready offers the core attributes that make a NQDC plan effective for participants without the complexities of a larger custom plan, including flexible contribution and distribution schedules.
As the holistic wellness needs of Americans continue to evolve, innovative compensation benefits are becoming an increasingly important way for employers to attract and reward leadership talent within an organization. As a result, more employers are looking to include NQDC, or executive benefit solutions, into their overall benefit offering; according to industry data, a majority (
“Many executives face unique challenges saving for retirement due to contribution limits of a traditional retirement savings plan,” added Hunter Penland, vice president, Non-Qualified Markets sales and service at Voya. “Because a NQDC plan can help address their needs, these options are becoming increasingly popular across the industry and even more so among our existing clients at Voya.”
Voya has been able to further its innovative, nonqualified compensation executive benefit solution along with its leading qualified plan administration services through an integrated experience that helps advance greater financial security for all participants. Most recently, the firm added Voya Investment Management’s Pomona Investment Fund, an alternative private equity product, as a new option to the Voya NQDC investment lineup. In addition, Voya has launched NQDC distribution portfolios, a first-of-their-kind investment model, developed with Voya Investment Management’s Multi-Asset Strategies and Solutions team, designed for individuals looking to closely align their NQDC distribution dates with the investments in their plan.
As an industry leader focused on the delivery of benefits, savings and investment solutions to and through the workplace, Voya is committed to delivering on its mission to make a secure financial future possible for all — one person, one family, one institution at a time.
1. Voya internal data as of Dec. 31, 2023.
2. PlanAdviser, “Small and Medium Businesses Driving NQDC Plan Growth,” (Dec. 2022).
About Voya Financial®
Voya Financial, Inc. (NYSE: VOYA), is a leading health, wealth and investment company with approximately 9,000 employees who are focused on achieving Voya’s aspirational vision: Clearing your path to financial confidence and a more fulfilling life. Through products, solutions and technologies, Voya helps its 15.2 million individual, workplace and institutional clients become well planned, well invested and well protected. Benefitfocus, a Voya company and a leading benefits administration provider, extends the reach of Voya’s workplace benefits and savings offerings by engaging directly with over 12 million employees in the
VOYA-RET
View source version on businesswire.com: https://www.businesswire.com/news/home/20240404161826/en/
Media:
Kris Kagel
Voya Financial
(201) 221-6534
kristopher.kagel@voya.com
Source: Voya Financial, Inc.
