CFO Focus: How a broken SERP was repaired

When designed properly, an executive benefit plan should offer unique advantages tailored to the needs and expectations of the executive while flexibly providing incentives that align with personal and organizational objectives.

I recently had a conversation with a credit union CEO who I’ll call “Sam” for the purposes of this article. Sam was concerned with the performance of his supplemental executive retirement plan. Sam explained how his plan had not been performing nearly as projected and how he and his board were at a standstill in terms of finding answers. During my 22-year career working with credit unions, I have seen the good, the bad and the ugly with respect to executive benefit plan designs, and I’ve seen my fair share of plans blow up as well.

Sam’s SERP happened to be a collateral assignment split dollar program, which involves the use of life insurance owned by the executive, and a loan arrangement between the executive and the credit union to pay policy premiums. It’s no secret that CASD plans have been struggling mightily throughout credit union land, due in no small part to interest rates reverting to their mean with a vengeance after having spent nearly a decade and a half at or near 0%.


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