QOTW: Vesting

Plan sponsors are evaluating many plan features in trying to ensure their retirement plan is competitive in a tight labor market. We recently asked them if the plan’s vesting schedule for company contributions is something they are re-evaluating to make the plan more attractive to new hires. One-in-ten sponsors stated they are taking a look at the vesting schedule and looking at moving towards immediate vesting.

Comments included:

• 100% once eligible
• 3-year cliff, no changes
• 5-year vesting policy seems too long nowadays. Wondering what the trend is.
• 6 year graded vesting.
• Always been 100% immediate.
• Have not considered it at this time
• No current plans but it could be a consideration to incent compensation packages
• No plans to change
• Our plan is not subject to vesting and we do not intend to add vesting at this time.
• Our vesting policy has been the same for 25 years and will likely never change.
• Participants are 100% vested in the plan, from day one.
• Still using a 3 year graded vest for our ER match.  Also offer a safe harbor contribution which is 100% vested immediately.
• We are considering the financial impact and discussing with our leadership to determine if it is feasible to go to immediate vesting.
• We are in the process of reviewing vesting policies, along with matching contribution percentages; however, we are not certain a change will occur.
• We changed to 100% vesting upon first day of employment in 2019 when we started our 403(b) Savings Plan.
• We don't have vesting on our plan. There is a one year wait for the employer contribution.
• We have a 5-year vesting for a generous company contribution and have no plans to change it.
• We have a safe harbor plan, so company contributions are always fully vested.
• We have considered going from a 5 year graded to a 3 year cliff, but then the company would have to start paying plan expenses directly rather than out of the plan. Also, we are constantly trying to work on retention. Shortening the vesting schedule seems to fly in the face of encouraging retention. We have done some surveys of new hires that show vesting isn't even on their radar when applying for a job.
• We have not seen this as a major issue for participants.  We do have a large portion of our population which are fully vested which may be the reason it's not an item for concern.