Reader Responses October 19, 2020

SURVEY SAYS: Creative Ideas for Halloween 2020

NewsDash readers share how they will ‘celebrate’ Halloween, as the COVID-19 pandemic has put a wrench in the usual traditions.

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Last week, I asked NewsDash readers, “Do you plan to participate in any Halloween traditions, and do you have any creative ideas for new ways to celebrate Halloween this year?”

Two-thirds (65.8%) of responding readers work in a plan sponsor role; 18.4% are recordkeepers/TPAs/investment consultants, 13.2% are advisers/consultants and 2.6% are attorneys.

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Decorating their homes (513%) was the most common Halloween tradition in which respondents plan to participate—probably one of the safest. Nearly one-third (32.4%) said they wouldn’t participate in any.

Nearly three-in-10 (29.7%) indicated they would be participating in a modified form of trick-or-treating; 16.2% selected “picking pumpkins,” “carving pumpkins” and “small party”; 13.5% said they will be dressing in costume; 8.1% will be making Halloween treats; and only 2.7% indicated they will visit a haunted house.

Some responding readers shared creative ideas they have for celebrating Halloween in 2020. Those included:

  • Home is located among a ‘circle’ of homes (about 35) off a busy street. Neighbors with young children have organized a parade around the circle. Many homeowners will sit in their front yard to watch and have treats in a bowl near the street for the parade participants.
  • We are participating in a health department sanctioned Trunk or Treat. It will be my first time decorating our car for a Trunk or Treat. Our theme is Jurassic Park.
  • A group I belong to is hosting its annual scavenger hunt. This year the gathering area will be on an acreage where we can socially distance, with a bonfire and chili feed. Should be fun!
  • My kid seems to think we’re going to have a scavenger hunt for candy at our house with a few friends. We worry we’ll forget where we hid the candy and the dog will find it.
  • Movie marathon
  • Strap a piece of schedule 40 PVC to your handrail on your porch steps and have the trick-or-treaters put their bags/buckets at the end of it and shoot the treat down the pipe.
  • Our neighborhood is asking families to setup tables outside to hand out candy. Most everyone is going to decorate their tables and wear costumes. Should be fun!
  • I thought I would make kid size Halloween printed material face masks and give them out with a candy bar. We live in the country and only have a handful of children stop by if they even come this year.
  • Trying to find a safe way to distribute candy, thinking of a device to shuttle candy to trick-or-treaters like a PVC pipe or snow shovel.
  • We were discussing ways to hand out candy with our social distanced lunch the other day – sticks in yard, slide/chute, leaving a bowl and my favorite – tossing it from your front door to the kids on the sidewalk…hoping for a basket! 🙂
  • An annual community event has been canceled so our company is stepping in to host a Trunk or Treat for anyone interested.
  • Put a table out with Halloween treats rather than putting in bags.

Several readers who left comments said they didn’t anticipate having children show up to trick-or-treat this year. Others said something should be done for Halloween to give children some kind of “normalcy” in this unusual year. Some readers are going to miss certain traditions, and one said, “I just can’t get into the mood for our normal Halloween traditions.” Editor’s Choice goes to the reader who said: “Everything about 2020 is scary. Hurricanes, COVID, killer wasps, etc. Shouldn’t take too much effort to be scary this year.”

A big thank you to all who participated in our survey!

Verbatim

You missed the MOST important Halloween tradition: SCARY MOVIES! 31 days of gasps, jumps, screams, and a couple of giggles because it doesn’t matter how many times I’ve seen a movie, I still jump like it’s the first time.

Thought about sitting in the driveway with a bucket of candy, but all the neighbors I talked to said their kids would be staying home. So, I guess it’s another night reading a book on the couch! At least the dog’s happy!

Really scary? I’ll check out stats on COVID and the election.

We rarely get trick-or-treaters in my neighborhood and expect none this year, so it will be business as usual: making a spooky-themed dinner and dessert and watching scary movies! I guess the upside is that we won’t have a bunch of Halloween candy laying around the house (there’s no office to take the leftovers to this year, boo!).

I just can’t get into the mood for our normal Halloween traditions.

We’ll have the candy ready for the trick or treaters for those who will venture out. If they’re willing to go, they should get at least some candy. I have not heard if our neighborhood is doing anything differently.

Due to a few bad apples/actors, the creative fun was lost a long time ago.

Not participating for the first time in my life.

I think the kids are safe outside and if people want to give out candy they should be able to IMO. It’s a great wrap up of summer for all.

Halloween will be different like everything in 2020. At least we will have a holiday, unlike Easter and Mother’s Day shortly after the virus broke out.

I’ve noticed a lot more decorations out this year. I prefer driving around looking at those. Begging people for candy that will end up in the trash isn’t my jam.

My kids are older now, but if I had younger kids I would invite a few of their friends over for a party, decorate the house, lots of food and snacks, that sort of thing.

Be safe and watch out for little ones.

We’re going to trick-or-treat and hand out candy, just like any other year.

I think there should still be events for kids. People can take precautions and still allow kids some kind of normalcy.

Everything about 2020 is scary. Hurricanes, COVID, killer wasps, etc. Shouldn’t take too much effort to be scary this year.

I have decorated my house, but Halloween is kind of a non-event around here. Not many kids

The desire for “normalcy” and socialization appears to be the driving force to maintain the holiday. The kiddies need a break from virtual life.

My community has opted to allow trick-or-treating with the usual safety precautions. Talk about a contact-tracing nightmare!

Just like everything else this year, I think the importance of it pales in comparison to the effects of the pandemic and the deaths it has caused. If we all want to have and return to normalcy soon, I believe that everyone needs to rethink their priorities.

Officially, I believe children are still allowed to trick or treat through neighborhoods. However, we do not anticipate many at our house.

NOTE: Responses reflect the opinions of individual readers and not necessarily the stance of Institutional Shareholder Services (ISS) or its affiliates.
Data and Research October 16, 2020

SERPs Less Prevalent but Still Offer Value

The latest information about supplemental executive retirement plans, and insights about plan trends, can be found in the Newport/PLANSPONSOR 2020 Executive Benefit Survey report.

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As has been the case with qualified defined benefit (DB) plans, the prevalence of DB supplemental executive retirement plans (SERPs) has also seen a decline over the last several years, according to the Newport/PLANSPONSOR 2020 Executive Benefit Survey. Forty-three percent of companies that participated in the survey reported having a SERP, but only 15% indicated their SERP was active.

Yet, there is still value to implementing a SERP. “Among public companies, SERPs are definitely less prevalent than 10 or 15 years ago. However, for private companies or for tax-exempt companies, SERPs are frequently added and used,” says Mike Shannon, Newport’s senior vice president of NQ [nonqualified] consulting.

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“For public companies, the tax rules and accounting rules concerning voluntary deferred compensation plans generally make them a more attractive approach for financial statement purposes. Additionally, equity compensation for executives provides a strong tool for wealth-building in addition to deferred compensation,” Shannon adds.

Private or tax-exempt companies lack straightforward access to equity compensation, he explains. The deferred compensation tax rules and accounting rules are different and, at times, less advantageous to voluntary deferred compensation plans. So, SERPs can provide important ways to help executives build wealth. Additionally, the plans often better fit the unique deferred compensation tax rules that apply to tax-exempt companies than do voluntary deferred compensation plans, Shannon says.

Twenty-three percent of companies that offer SERPs said their SERP was frozen to new participants, and 11% reported it was frozen to new benefit accruals. Shannon explains that a frozen SERP will remain with at a company until the last participant is paid out—which could be well into the future. “As an example, a 45-year-old in a frozen DB SERP may have 20 years before he begins collecting a benefit and may collect it for another 15 to 25 years. So, it’s not impossible for a frozen SERP to last 40 to 50 years into the future,” he says.

There is a pension risk transfer (PRT) market for SERPs. However, Shannon says, unlike qualified pension plans, SERPs would typically be involved in a “pension buy-in” rather than a “pension buy-out.” That is, instead of settling the benefit and removing participants from the plan, an asset is purchased for the plan to ensure that plan assets and liabilities are matched, and benefits are paid by the plan sponsor.

“Alternatively, the plan could potentially be terminated and settled using either cash or annuity distributions to settle the benefit,” Shannon says.

SERP Plan Designs

According to the Newport/PLANSPONSOR 2020 Executive Benefit Survey, the most common benefit formula for DB SERPs is “offset” (56%). Often, these plans allow benefits inaccessible to executives through qualified plans, due to statutory limits.

Flat dollar (23%) amount and “other” (20%) were the next most common benefit formulas. Flat dollar amounts and other methods are common forms of SERPs when equity compensation is unavailable, Newport says in the survey report. Formulas under “other” included a percentage of compensation and a rate of interest intended to provide a specific benefit amount.

Cliff vesting is the most common vesting method, at 59%, for SERPs. Newport says vesting after a specified number of years is a transparent and straightforward approach to vesting when a SERP is either a make-whole arrangement for a group of participants or an “equity replacement” for a few.

Retirement (87%), death (76%), disability (53%), termination by the participant (72%) and termination by the company without cause (63%) are the most likely circumstances under which a distribution from a SERP may occur. A lump sum (68%) is the most common form of distribution.

Newport says the high percentage of lump-sum distributions may have resulted from 457(f) arrangements in the tax-exempt market, but another factor may be that participants have some benefit-security concerns post-retirement when they are no longer involved in the day-to-day decisions of the company.

Newport notes that lump-sum distributions are less tax efficient. “Participants can move to states with zero or low state income tax, collect SERP benefits over at least a 10-year period and minimize their state income taxes,” the survey report says. “However, if a participant resides in a high income tax state and/or receives payments over fewer than 10 years, there may be a considerable tax bill that could have partially been avoided” by taking his SERP distribution in installments.

The Newport/PLANSPONSOR 2020 Executive Benefit Survey report includes findings about nonqualified deferred compensation (NQDC) plan design, administration and funding, as well as more information about supplemental executive retirement plans. The report may be downloaded from here.

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