Setting Up Vesting Definitions

Schedule Name

Specify the name of the schedule. Except for immediate vesting, employees vest according to a schedule. Although there is usually one schedule per definition, a vesting definition can contain multiple schedules. When such a definition is applied, employees automatically use the schedule that yields the highest vesting percentage.

For example, if vesting usually uses a five-year cliff service schedule, but employees automatically vest at age 65, you could set up two schedules: one for cliff service and one for step service that is age-based, with a single row showing 100 percent vesting at age 65. Employees 65 and over would automatically get 100 percent vesting, regardless of their service.

The most common reason for using multiple schedules is a change to the plan rules. Giving employees the better of the two schedules allows you to grandfather the old rules. Typically, only employees participating as of the date of a rule change use the hybrid definition. You create this restriction by grouping employees within the vesting function result.

Interpolate

Vesting schedules show the percentages used for specific service amounts, ages, or other vesting criteria. You can use interpolation to specify how to deal with employees who fall between the explicitly shown steps on a schedule.

When Interpolate is:

• Not selected, employees who fall between steps on the schedule must use the lower amount.

• Selected, intermediate amounts yield intermediate vesting percentages calculated by linear interpolation.

The system does not interpolate below the lowest step on a schedule.

Schedule Type

Select one of the following five options:

• Age: Select this option to specify the age requirements for vesting.

  When you select Age, complete the parameters in the Age Result group box that appears.

• Cliff: Select this option to set up a cliff vesting schedule. A cliff schedule is one of two types of service-based vesting schedules. It grants full vesting after a specified number of years of service.

  When you select Cliff, complete the parameters in the Cliff Service Result group box that appears.

• Step: Select this option to set up a step vesting schedule. A step schedule is the second type of service-based vesting schedule, where employees vest in increments.

  When you select Step, complete the parameters in the Step Service Result group box that appears.

• Table: Select this option to set up a table lookup. Enter the alias for your table lookup in the Table Name field that appears.

• User Code: Select this option to use your own customized vesting rules.

Result

Enter an alias for the employee's age. This is a duration alias for the employee's age at the event date.

Age

Enter an age for each row in your vesting schedule.

Percent

Enter the percentage associated with the number you enter in Age.

Result

Enter the name of the cliff service result.

100% Vested After

Enter the number of years required for vesting in the Years field. Be sure your service function result is set to measure service in years.

Result

Enter the name of the step service result.

Service

Enter the minimum years of service for a particular vesting percentage.

Percent

Enter the vesting percentage associated with the number of years you enter in Service.

Disability

Select this option when disability triggers full vesting. The vesting calculation checks the reason code for the calculation to verify whether either condition is met.

Death

Select this option when death triggers full vesting. The vesting calculation checks the reason code for the calculation to verify whether either condition is met.

Custom Statement

Select this option to use your own custom statement. Enter the custom statement name in the text box.

The custom statement should consist of a Boolean statement that specifies the conditions for full vesting. For example, if a special early retirement window offers full vesting, you might use a statement like this: If Event Date is greater than 1/1/2005 and Event Date is less than 1/1/2006 (As with all group custom statements, the "then" part of the if-then statement is implied.) If the custom statement is true, employees meet the full vesting conditions.

Retirement Types

Select this option to grant full vesting to employees, based on eligibility for specific retirement benefits, such as early retirement. If you set up death and disability retirement types, you can use those instead of the Death and Disability options on this page. This enables you to check employee data for death and disability conditions, rather than relying on the pension administrator to set a particular calculation reason.

Information about an employee's retirement type is provided by the benefit eligibility function. To indicate that a particular retirement type triggers full vesting, add the benefit eligibility function result for that retirement type to the Retirement Type list.

If you include retirement types as triggers for full vesting, you need to be sure to process those benefit eligibility function results before you process the vesting function. This means you have to place them before vesting in the calculation job stream.

User Code

Select this option to use your own custom code to evaluate full vesting conditions.

Death with No Beneficiary

Select this option if an employee who dies without a beneficiary forfeits all right to a pension benefit. If the event type on the calculation page is death, the vesting function first checks the plan beneficiary table where you record beneficiaries who are not spouses. If no beneficiary is specified, the system selects the Death with No Beneficiary check box.

Withdrawal of Contributions and Max Vesting Percent (maximum vesting percent)

Select the Withdrawal of Contributions option if the plan can demand that an employee forfeit the right to all accrued benefit if, when terminated, the employee withdraws his or her contributions to the plan. The system checks the plan's employee contribution account specified on the Plan Aliases page to see if contributions were withdrawn.

If you select the Withdrawal of Contributions check box, you can also enter a maximum vesting percent that the system uses as the break point for forfeiture. For example, a terminated employee who is 80 percent vested might retain that 80 percent even after withdrawing contributions, while an employee who is only 40 percent vested might have to forfeit this vesting after withdrawing contributions. If you do not enter a maximum percentage, withdrawal of contributions always triggers forfeiture.

Custom Statement

Select this option to set up other forfeiture conditions by creating a custom statement. Enter the custom statement name in the text field.

The custom statement should consist of a Boolean statement that specifies the conditions for forfeiture. If the custom statement is true, employees meet the forfeiture conditions.

User Code

Select this option to use your own custom code to evaluate forfeiture conditions.