Vesting (Unverfallbarkeit)

Concept

In occupational pension law, vesting refers to the preservation of an already accrued entitlement to a future pension benefit, even where the employee leaves employment before the pension event occurs – that is, before reaching the age limit, disability, or death. In many jurisdictions, vesting requires both a certain minimum period of service and a minimum age of the employee at the time of departure.

Legal Consequences of Early Departure

If the entitlement has already vested at the time of departure, the benefit entitlement accrued up to that point is preserved at the level already earned and is paid out by the former employer or the pension provider once the pension event occurs; if, on the other hand, the entitlement has not yet vested, the departing employee generally loses the entitlement already accrued entirely.

Portability and Transfer

To allow a departing employee to continue their pension provision, many jurisdictions provide for the possibility of transferring a vested entitlement to the new employer or an external pension provider upon a change of employer; without such a transfer, the entitlement remains with the previous pension provider and only becomes due once the pension event occurs.