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Preview: Newport's 2020-2021 Compensation, Retirement, and Benefits Survey

How have compensation, retirement, and benefits programs been impacted by COVID-19?  What strategies have employers implemented to contain costs yet manage to reward staff and executives?

Conservative salary increase budgets with strategic use of limited budget dollars to reward top performers.  Managing through retirement plan match suspensions and CARES Act distributions and loans.  Focus on financial wellness and employee health and physical and mental wellbeing.  Remote and flexible work hours.  These are just a few of the key findings from Newport's Compensation Consulting team and its annual Compensation, Retirement and Benefits (CRB) Trends Report for 2020-21.

This year, we launched the survey early to bring results sooner to our clients and colleagues. Beyond the general trends, there is additional focus on how organizations are strategically managing compensation, retirement, and benefits programs in response to COVID-19. Below are some of the key findings:

  • Average 2020 base salary increase budgets overall are close to 2.0% including organizations that have instituted salary freezes
  • Remote and Flexible Work, Financial Wellness and Student Loan Repayment Assistance are amongst the top benefits organizations are considering adding or augmenting
  • NQDC plan enhancements this year will focus to include improved overall participant communication and education
  • Employers continue to rate retirement plan costs as an important criterion when choosing a retirement plan provider. However, in 2020, the level and quality of service was rated above costs of investments and costs of service when evaluating retirement plan providers

The tenth edition of our annual survey includes responses from over 500 organizations across a broad range of industries, including manufacturing, healthcare, not-for-profit, professional services, construction, and financial services. Here’s some more of what our survey revealed:

Compensation Practices 

Early results from our Newport 2020-2021 Compensation, Retirement and Benefits Trends Report indicate minimal economic impact to salary budgets resulting from the coronavirus pandemic, which was a surprising result. 

Overall, average 2020 base salary increase budgets are close to 2.0% if we include organizations that have instituted salary freezes (close to 20%). However, if we exclude organizations with salary freezes, the overall average and median salary budgets are quite comparable to budgets seen in recent years (around the 3% mark).  This leads us to believe that a majority of organizations have decided to move forward with typical salary increases. 

  • Organizations expect to continue to differentiate employee pay increases based on performance
  • Targeted Short Term Incentives and annual bonuses are expected to be less in 2020 across budgeted amounts for all employee categories
  • Most organizations are being conservative with Executive pay, as seen in annual salary increase budgets and projected salary structure movement

Employers are increasingly focused on flexibility when it comes to recruiting, rewarding and retaining top performers. While median salary increase budgets remain near 3.0% for the upcoming year, the salary increase gap between the highest and lowest performers is widening, as employers reinforce desired performance and shift limited compensation budgets to high performers.

The use of short- and long-term incentives with performance measures aligned with strategic objectives is increasingly popular. This continues to be a recurring theme as in past years.

Retirement Programs

A vast majority of organizations surveyed (90%) offer a defined contribution plan.  Matched Defined Contribution plans requiring employee contributions remains the most prevalent retirement plan type offered.  Over 50% of employers provide between 3% and 4.9% maximum match, as a percent of compensation.

Approximately 85% of employers offering retirement plan contributions report their plans will remain the same compared to last year, as a result of COVID-19 or related economic circumstances.  Less than 10% of organizations surveyed temporarily suspended contributions due to COVID-19. 

And while the cost of such plans continue to be an important criterion when choosing a retirement plan provider, the costs of investments were a secondary concern to the level and quality of service provided. 

Health and Welfare Benefits

Employer health plan costs continue to climb this year as organizations offer employee group health coverage to attract and retain their workforce. Preferred provider organizations (PPOs) continue to be the most widely offered and the most attractive plan to employees. The use of high deductible health plans (HDHPs) continues to increase, with nearly 60% of our respondents offering this as an alternative. 

Premium cost increases continue to temper as in past recent years, with the predominant increase in the range of 4% to 8%. To manage health and welfare plan costs, an increasing number of employers reported passing on an average of 25% of those costs to employees through higher premiums or introducing higher deductible plans and/or larger co-payments among other plan design options.

Newport will be hosting a Nov. 11 webinar on the Compensation, Retirement and Benefits Trends Report for advisors and plan sponsor clients. Look for details in our upcoming email announcements.


Newport Group, Inc. and its affiliates provide recordkeeping, plan administration, trust and custody, consulting, fiduciary consulting, insurance and brokerage services.
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Newport Group, Inc. and its affiliates provide recordkeeping, plan administration, trust and custody, consulting, fiduciary consulting, insurance and brokerage services.
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