UK Accounting Glossary
To become vested employees of a company or corporation must adhere to a waiting period. The employer determines the length of time required to become vested; it usually ranges anywhere from one to five years. By being vested an employee becomes eligible for a full percentage of the contributions that their employer makes to their pension or qualified benefit program. The amount to be vested applies to employer payments made either to the company’s profit-sharing plan or Employee Stock Ownership Plan (ESOP). Being vested into an employer benefit program relates only to the portion the employer contributes. Accordingly, what employees contribute of their own money doesn’t need to be vested. After an employee is fully vested, the employee is eligible to retain the entire amount contributed by their employer, even if they decide to leave the company prior to retirement.
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This glossary post was last updated: 5th February 2020.