The Impact of Long Vesting Periods on State and Local Workers

Alicia H. MunnellJean-Pierre AubryJosh Hurwitz Laura Quinby

SLP#26

The brief’s key findings are:

  • Public sector defined benefit plans provide short-tenure workers with little or no pension benefits.
  • One reason is that these plans have long vesting periods – the years of service needed to qualify for any benefit.
  • The longer the vesting period, the less likely an employee will remain long enough to vest.
  • This effect helps explain why nearly half of workers depart without any promise of future benefits.