ABA Family Legal Guide

Law and the Workplace

Leaving a Job

Pension Plans

When do benefits vest in the worker?

Vesting refers to the point after which the employee's accrued benefits cannot be taken away--they must be paid to the worker upon retirement. If a worker leaves his job before his pension vests, he loses any pension benefits that he accrued. Once the benefits vest, however, a worker is entitled to a retirement benefit even if he subsequently quits that job.

Employee Retirement Income Security Act (ERISA) provides two different methods for vesting. One method requires that after five years of service employees are eligible for 100 percent of their retirement benefit. A second method provides for a graduated system of vesting: after three years of service, employees are eligible for 20 percent of their pension benefit; after four years, 40 percent; after five years, 60 percent; after six years, 80 percent; and after seven years, 100 percent.