A vested benefit is a legal entitlement or right that has been earned or acquired and cannot be revoked or forfeited, typically due to meeting certain conditions or requirements. In employee benefit plans, such as retirement or pension plans, a vested benefit is one that an employee has earned through years of service and is entitled to receive regardless of their employment status. Once vested, the employee has a legally protected right to the benefit, even if they leave the company before retirement. Vested benefits provide individuals with security and assurance regarding their future financial well-being.
A benefit to which an employee has full entitlement and one which he will retain in any circumstance.
A vested benefit is a benefit to which an employee has full entitlement and one which he will retain in any circumstance. In any companies benefits such as pension entitlements or shares don’t become vested benefits until an employee has served the company for a stated number of years; In this instance if the employee leaves the company prior to this time, any benefits may be forfeit. Whether or not benefits are vested will ultimately affect the accounting value of an entity’s obligations under a defined-benefit pension scheme or employee share plan.
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This glossary post was last updated: 29th March, 2024.
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