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Voya offers first-of-its-kind nonqualified deferred compensation distribution portfolios for workplace clients

Voya Financial has launched new distribution portfolios for its nonqualified deferred compensation (NQDC) plans.

The first-of-their-kind investment models were developed with Voya Investment Management’s Multi-Asset Strategies and Solutions team and are specifically designed for individuals looking to closely align their NQDC distribution dates with the investments in their plan.

Voya’s NQDC distribution portfolios provide four professionally managed asset allocation options providing flexibility for individuals to elect scheduled distributions using one or more investment time horizons with distribution windows of three, five, eight or 10 years.

“Providing the tools, resources and knowledge to support individuals throughout their nonqualified deferred compensation plan experience is critical in helping them achieve their financial goals,” said Kirk Penland, SVP, Nonqualified Markets at Voya Financial. “We know target-date funds (TDF) are one of the most popular investment choices when it comes to one’s 401(k) plan, so we wanted to structure a solution with similar benefits of a TDF but tailored to the needs of NQDC participants. Rather than providing a distribution that is tied to a retirement date as you would see in a TDF, the distributions are aligned to dates that one has selected to receive their nonqualified plan savings. This offers several advantages for those looking to tie distributions to certain life stages beyond retirement, such as saving for a child’s education, a new house, or any short-, medium-, or long-term goals.”

Distinct from a 401(k) or other qualified defined contribution plan, distributions from NQDC plans require an employee participant to select when and how they will receive the compensation they have deferred. Many plans allow for scheduling distributions during the course of one’s career, not just at retirement, providing the ability to defer compensation to cover shorter-term goals.

As a result, distributions can be structured in various ways — from payments over a specific period of time to a one-time lump-sum payment. And since most deferred compensation plans also allow individuals to choose investment options for their deferred compensation balances, in some cases, each year's deferred compensation balance can be invested differently.

Through Voya’s new distribution portfolios, individuals are provided greater flexibility to coordinate the lump-sum distribution election and the investments — ideally, reducing possible account volatility as one gets closer to each distribution.

“Flexibility is incredibly important when it comes to the benefits that a deferred compensation plan can provide,” added Penland. “It’s also becoming increasingly important to provide support not just for the tracking of contributions and distributions, but also in providing a platform that allows participants to manage and integrate their distributions with their broader savings plans and assets.”

Voya’s models come at a time when many working Americans are seeking guidance and support for making fund or investment selections within their workplace retirement plan. According to new research from Voya, only 35% of Americans currently enrolled and actively contributing to a workplace retirement plan are very confident about making fund or investment selections within their plan. 1 The good news for employers is the same research also found a significant amount (82%) agree or strongly agree that they want a personalized-advice or guidance service that constructs their retirement investment portfolio based on risk tolerance levels — providing a clear opportunity for employer support in this area. 2

The models were developed by Voya Investment Management’s Multi-Asset Strategies and Solutions (MASS) team, which oversees $33 billion in assets under management and consists of more than 25 investment professionals who design customized and packaged multi-asset-class solutions, including $19 billion in target-date strategies, as of Dec. 31, 2020.

Voya first announced its offering of nonqualified deferred compensation benefit plans nearly three years ago, providing nonqualified services across all of Voya’s 401(k), 403(b) and 457 plan markets and offered as an integrated solution when Voya is administering an employer’s core defined contribution retirement plan. The services are also available when an employer is looking for nonqualified plan support on a stand-alone basis.

With the addition of these features, Voya has been able to advance its innovative, nonqualified compensation benefits along with its leading qualified plan administration services through an integrated experience that helps to ultimately advance greater financial security.

As an industry leader focused on the delivery of health, wealth and investment solutions to and through the workplace, Voya Financial is committed to delivering on its mission to make a secure financial future possible for all Americans — one person, one family, one institution at a time.

This article was written by The Associated Press from The Associated Press and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to legal@industrydive.com.

Read related articles:

  1. 4 tips for creating highly effective nonqualified deferred compensation plans
  2. The pros and cons of nonqualified deferred compensation

1 & 2. Based on results of a Voya Financial survey conducted through AYTM – Ask Your Target Market online research platform between Jan. 18–26, 2021, among n=750 Americans ages 18+ who are full-time employees and actively contributing to their employer-sponsored retirement plan, balanced by age and gender to reflect the U.S. population.


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