Business, Legal & Accounting Glossary
Benefits arising from a share option plan or pension scheme must be made available to the employee within a certain period of time. The vesting period is the period before the shares are owned by the employee.
The process by which the rights to an asset pass to a recipient is known as vesting. The term is most commonly applied to a pension plan, in which an employee acquires the right to future payments from the plan. For example, an employer may provide 100 percent vesting in the employer matching of any employee contributions made to a 401(k) retirement plan after the employee has worked for the company for five years. In this case, the vesting period is five years. The goal of vesting is to keep employees for an extended period of time, reducing the negative effects of employee turnover.
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This glossary post was last updated: 13th April, 2022 | 0 Views.