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There’s Big Money in Pre-Funding Employee Benefits


Is your credit union giving employee benefit costs the attention they require? If not, you could be setting your CU up for a lack of staff quality. Discover how a pre-funded employee benefits investment account can help you attract and retain top-notch talent while keeping your costs in line.

Institutions across the United States face rising employee benefit costs.Thankfully, there are many avenues to pursue to offset these expenses. Providing an appropriate response to this growing trend should be on all board agendas, particularly because it relates to attracting and retaining quality employees.For credit unions, the framework in Section 701.19 of NCUA’s rules and regulations offers a solution in the form of a pre-funded employee benefits investment account. These programs have been gaining momentum over the past few years as more credit unions embrace the advantages of these programs.

Investments that are used to pre-fund benefits vary widely but generally fall into two broad categories: insurance investments and securities. Figure 1 illustrates the current composition of the industry and the growth since 2014. As of Q3 2017, insurance investments (split-dollar and other) account for just under 50 percent of the total industry pre-fund investments. Meanwhile,securities account for 37 percent and other investments 12 percent.Since 2014,securities and split-dollar life insurance investments have grown rapidly.

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