had a job interview the other day where they mentioned that i would get a pension that was vested in 10 years if i was selected for the job
wtf does a pension being vested mean? and whats the different between a pension and something like a 401k that makes people like pensions more?
In: Economics
“Vesting” just means you get access to the benefit over time. Usually there’s two parts two vested benefits:
1. Monthly, you get a percentage of the maximum benefit
2. When you complete certain benchmarks, you get a big chunk of the maximum benefit.
So imagine you have a $50,000/yr max pension vesting over 10 years. It might be set up so that after 5 years, you get $25,000/yr in pension benefits as a guarantee. Then for the next 5 years, you add $415 more for each month you work.
If you leave in 4 years, you get nothing. If you leave in 5 years, you get $25,000/yr in pension. If you leave in 8 years, you get $40,000/yr in pension. If you leave after 10+ years, you get the full pension.
The paperwork they offer you will lay out what is called the “schedule,” which is just the terms of how long you need to work to get each bit of your benefit.
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