The Truth About Retirement Plans for Credit Union CEOs

Time for Change

In recent years, we’ve seen headlines vilifying CEOs for receiving hefty compensation payouts, especially in financial services. However, the reality for many credit union CEOs, particularly those from smaller credit unions, tells a much different story. The notion that these leaders are raking in millions is far from the truth. Many of these individuals have sacrificed their financial security to keep their credit unions afloat, often going decades without adequately funding their retirement plans.

Take, for example, a $20 million asset credit union MSA worked with on a merger. The CEO had been with the organization for 40 years. Despite the Board approving the funding of a Supplemental Executive Retirement Plan (SERP) for this CEO, it never materialized due to a recession and financial constraints. As a result, when the merger was finalized, MSA strongly recommended that the assuming credit union honor that compensation to ensure the CEO had some sort of retirement, considering the sacrifices made for the credit union.

This situation is not an anomaly; it’s an unintended consequence of the deep dedication that credit union leaders have to their organizations. They view their work as more than a job—it’s their passion, and in many cases, they see their credit union and its members as an extended family. These executives are not just driven by profits or personal gain. They’ve often put their financial well-being on the back burner for the sake of their members and their communities.

Is Your Executive Compensation Plan Underfunded or Non-Existent?

It’s shameful that, as an industry, we haven’t done more to support these credit union CEOs. The issue of underfunded or non-existent retirement plans for long-serving executives is far more common than it should be. Volunteer boards, while well-meaning, often face financial pressures and oversight from the National Credit Union Administration (NCUA) that make it challenging to prioritize executive retirement funding. They want to support their CEOs but feel the squeeze when balancing budgets.

At the recent America’s Credit Union Museum’s HERSTORY induction, we heard yet another story of a credit union CEO who put the needs of her credit union and members ahead of her retirement. This dedication is admirable, but it also exposes an inconvenient truth: too many credit union executives are left without adequate retirement plans, all because they chose to prioritize their members over their financial futures. It’s high time we address this issue as an industry.

The Need for Executive Retirement Plans is Overdue

We need transparent, relevant retirement plans that honor the long careers of our dedicated credit union leaders. These individuals have sacrificed for decades to serve their members and uphold the credit union movement’s cooperative, not-for-profit mission. These same leaders have fought for the industry’s tax exemption for 100 years, ensuring that credit unions can continue to serve their communities for the greater good.

Barb Lowman, a long-time advocate for retirement plans in small credit unions, captured the situation perfectly when she said, “We do the work, show the plan to the Board, but it often ends with good intentions, not funding. We can do better.” And she’s absolutely right. It’s time we step up and ensure that the very people who have given their all to their members are not left behind regarding their retirement.

We owe it to our CEOs, members, and the credit union movement to establish proper, fully funded retirement plans. Let’s stop relying on one-off payouts that attempt to fill the gaps left by years of financial sacrifice. Instead, let’s commit to valuing the selfless service of these executives and build a more sustainable future for all credit union leaders.

Want to learn more?

Attend our next UNDERGROUND Collision on October 26, 2024, and prepare to get THRILLED as you learn about CUSS (Credit Union Shared Services) and how it can make a difference for your credit union. Register here.

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