The NASPP Blog

Last week, I summarized trends in retirement provisions for stock awards from the NASPP’s 2013 Domestic Stock Plan Design Survey (co-sponsored by Deloitte Consulting LLP).  It turns out that the topic of retirement is one of endless blog fodder, so this week I look at more trends in this area.  This week’s data is from the NASPP’s March 2014 Quick Survey on Retirement Provisions.

The Quick Survey Results

• Retirement Eligibility: According to the NASPP’s Quick Survey, most companies (61% of respondents) have both a minimum age and a minimum service requirement that must be met to retire. Another 21% require a combination of age plus years of service (e.g., age, when added to years of service , must equal at least 65).
• Minimum Age:  Where companies have a minimum age requirement to retire, for 81% of respondents, that age is somewhere between 50 and 60 years.  For the majority (58% of the total respondents), that age is between 50 and 55 years.
• Minimum Service:  The most common minimum service requirement is ten years (57% of respondents); second most common is five years (29% of respondents).  These two categories account for 86% of the total respondents, so if your company’s requirement is different, you are definitely a bit of an oddball (and even more of an oddball if your age requirement is outside of 50-60 years).
• Age + Service:  It’s a little harder to define a trend for companies that require a combination of age plus years of service.  There is close to a tie between 61-65 (34% of respondents) and 66-70 (28%).  But 71-75 is not that far behind, at 19% of respondents, and 50-60 is not that far behind that, at 11% of respondents.  76-85 was last, but still in the running, at 9% of respondents.  So, do whatever you want here.
• Minimum Time From Grant to Retirement:  At the majority (68%) of respondents, an eligible employee could be granted an award today, retire next month, and receive the payout provided to retirees under the terms of the award. Where awards do have to be granted a specified period of time before retirement for the retirement provisions to apply, for 47% of respondents, that time period was 1 year (for another 19%, it was six months).
• Non-Competes:  41% of respondents say that retirees are not subject to a non-compete agreement.  30% say that only retirees above a specified rank (e.g., executives), are subject to a non-compete.
• The Same Strokes for Different Folks:  Most companies are egalitarian in the application of their retirement provisions.  90% or more say that the same provisions apply to execs vs. other management or the rank-and-file and US vs. non-US employees.
• Collecting FICA:  When employees become eligible to retire, 73% of respondents rely on the rule of administrative convenience to delay collecting FICA to a subsequent date in the same calendar year (either alone or in combination with the lag method).  Practices are evenly split between share withholding and withholding the taxes from employees’ wages or other compensation (41% of respondents in both cases).

Well, that’s probably about it for retirement provisions (at least until we conduct another survey).  Next week I promise to have something new to talk about.

– Barbara