How saving, understanding SERPs, and vetting your providers can make or break your retirement plan.
By Chris Jones, ChFC®, CLU®
When my PARC Street Group colleagues and I use our 200+ combined years of experience to advise top credit union leaders and their boards about Supplemental Executive Retirement Plans (SERPs), we share financial planning strategies that we’ve seen work for many people and also some special ones specific to execs. Here are five critical steps you can take toward having the financial situation you need for the retirement lifestyle you want.
As the new year continues to unfold, we suggest doing three things in response to the NCUA’s new succession planning rule:
1. Save.
It’s well-established that saving when you’re young will pay off at retirement. I’ve seen this firsthand. If you start saving 10% of your income for retirement when you’re in your 20s and retire when you’re 65, you may not be able to spend all the money you have. The older you are when you start saving in earnest, the more you’ll have to save to get the same result. If you start in your 30s, you’ll need to save 15%, in your 40s, 20%, and in your 50s, 25-30% to be in the same spot at retirement. Hopefully, you started saving early. But even if not, start now. It’s like planting a tree—the best time to do so is yesterday.
2. Recognize the Complexity of Executive Retirement Planning.
Federal law sets an annual 401(k) contribution limit that has been problematic for top executives because they may not be able to save enough in a traditional 401(k) to generate retirement income on par with the salary they’ve been earning.
Saving enough for retirement will continue to be difficult for high earners in 2026. The IRS has raised the contribution limit to[1], and people aged 50 or older who make more than $150,000 a year will be allowed to make a catch-up contribution of up to $8,000 into a post-tax Roth 401(k). Notably, not every employer offers a Roth option, though some are adding one now.
To help fill the gap, many credit union boards and CEOs turn to SERPs.
Setting up a SERP is a good yet complex undertaking. In the credit union space, two kinds of SERPs are available: 457(f) plans and split dollar life insurance plans. These days, many credit unions and executives look to split dollar SERPs, which by regulation can be based on either
3. Be Intellectually Curious.
Credit union boards need to be intellectually curious, almost by definition. If you’re a board member, you need to study the financial services industry for best practices and emerging trends. You need to ask the right questions of your CEOs to be better able to set strategy for the organization and understand if the credit union’s risk profile matches your board’s risk appetite. This same intellectual curiosity will serve you well when establishing a complicated program like a SERP.
Similarly, any executive for whom a SERP is being established, like a CEO, or who may be helping the board set up a SERP, like a CHRO, needs to be intellectually curious about any SERP being discussed.
If you’re an executive, this kind of curiosity will help you get a solid understanding of the plans vendors are presenting. Dig in, ask questions, and find out what really differentiates one plan from another—and the reasons one may carry a larger or smaller upfront price tag than another.
We’ll talk more about what questions to ask in the next section.
4. Consider the Math.
I majored in math and worked in engineering early in my career. So, I was a big fan of math before I got into financial planning and life insurance. Math is just as important for success with SERPs as it is for success in engineering. Only when you consider the math can you make an educated decision about the risks in your retirement plan.
This 2023 LinkedIn article explains that analyzing a life insurance illustration is imperative because illustrations assume a constant growth rate even when the crediting strategy of the product is subject to market volatility. This assumption, the article says, can create “an illusion of future projections and an expectation of policy performance” that is too optimistic. According to another 2023 article, stochastic analysis, also known as “Monte Carlo” analysis, can deepen understanding of the dynamics of flexible premium products like indexed universal life.
When you do the analysis, you’ll find, as we have, that the dividend rate on which whole life benefits are based is far more stable than the cap rate that is the primary driver for IUL insurance. Whole life insurance dividends have tracked with interest rates over the last 40 years and have shown resilience during low-interest-rate years[2]. In contrast, IUL was introduced less than 20 years ago. The cap rate on the original IUL products has largely declined over the whole timeframe, except for the last 12 months, which saw a small increase[3].
Our whitepaper explains all the math behind our decision to only implement retirement plans based on the much less volatile whole life insurance from a mutual insurance company.
5. Look Deeply at the Experience of Your SERP Provider
Apply your intellectual curiosity to learning about the experience and credentials of the people showing your SERP options. Find out how long the vendor reps you’re working with have been doing financial planning. Ask about their experience with life insurance and what insurance industry certifications they have earned.
Beyond credentials, don’t be afraid to ask seemingly hard questions of your SERP provider. It’s worth it to get proof that your retirement benefit is secure. Don’t accept promises. Here are some important questions to ask:
- Is this plan based on indexed universal life or whole life?
- If it’s based on IUL: “May I see the Monte Carlo-like analysis of my plan?” We’ve already mentioned that Monte-Carlo analysis is a sophisticated math tool that’s the only effective way to analyze this kind of plan.
- If it’s based on IUL: “May I see the numbers showing the probability my plan has of succeeding, that is, of delivering to me the benefit at retirement that you’re showing me?”
We don’t earn anything by running the numbers and walking clients through every detail, but we believe clarity is part of doing what’s right. Ensuring people truly understand the plans they’re considering is what lets us sleep well at night.
Credit unions and their executives deserve the best SERP guidance possible. If this article has sparked questions, please reach out.
This article was originally featured on CUInsight.com
[1] 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 | Internal Revenue Service
[2] Dividends are not guaranteed.
[3] Whole Life Dividend and Indexed Universal Life Cap Rate Inforce History.pdf
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About the Author
Chris J. Jones, CLU®, ChFC®
Partner & Senior Benefits Consultant
Known for his analytical mindset and mathematical precision, Chris works closely with credit unions to design Supplemental Executive Retirement Plans (SERPs) that are not only durable and compliant but also grounded in data that supports long-term performance. With more than three decades in financial services, he has built a reputation for ensuring that every plan rests on solid numbers and delivers on its promise to executives and boards.
Since 2014, Chris and his team have implemented more than 200 split-dollar SERPs for credit unions and nonprofits, each one on track or exceeding its original performance projections.
Jennie Boden
Chief Executive Officer & Lead Consultant
Jennie is the CEO & Lead Consultant at Quantum Governance, L3C, a Callahan Company – bringing to the organization nearly three decades of experience in governance, strategy, management, leadership and communications expertise in the credit union and nonprofit sectors.
Jennie has led transformational governance and strategy work with credit unions and nonprofits across the country. The firm has worked with almost a third of credit unions in the U.S. that are $1B or greater in assets and with four of the top ten largest credit unions in the U.S.
Under Jennie’s leadership, the group has presented at more than 30 credit union conferences and continues to champion the credit union movement by providing board and C-suite leadership with the resources and guidance to achieve governance excellence.
