What Does Full Vesting Mean?
Full vesting, in the context of insurance, is the granting of absolute rights to a claim or benefits to the person entitled to them. It is a process wherein employees are granted full rights to the benefits of a stock option, retirement plan, or profit-sharing scheme after working in a company for a particular number of years.
Insuranceopedia Explains Full Vesting
Full vesting is a term most commonly used in employment benefits wherein the employer and the employee enter into a plan that offers benefits, such as a pension. The employer may grant full benefits or only a portion, and sometimes, this transfer is subject to conditions. In full vesting, the employer grants absolute rights to the employee so that the latter can claim the entire amount in the account. Here, the vested right is absolute, and any attempt by the employer or any other persons, such as the employer’s creditors, to reduce the amount is not possible.
Many employers benefit from full vesting because they are able to retain talent while also offering them lucrative benefits if they stay for a period of time.