Only after a worker has become fully vested is he guaranteed the permanent rights to the benefits of a company?s pension or retirement plan. Benefits are accrued over time starting as soon as the worker chooses to participate in a plan, and will only become fully vested after they have worked a minimum length of time as set forth in the individual plan. Although a worker could lose their
. benefits if they terminate their employment prior to becoming vested, once fully vested they are entitled to their benefits regardless of whether they remain with the company until retirement or not. There are two types of vesting schedules, cliff or graded vesting that a company may choose to offer. Cliff vesting requires that an employee must become fully vested after no more than 5 years, although the company is at liberty to offer full vesting even after a shorter time. Graded vesting requires a worker to be vested at least 20 percent after three years, and an addition 20 percent per year for the next 4 years, becoming fully vested after no more than 7 years.
