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OneDigital Retirement + Wealth Consultant Discusses Vesting and the Shift in Current Benefits Trends

A recent report from Vanguard shows that about half of plans immediately vested their participants in employer matching contributions.

However, this report shows that 25% of plans use a five or 6-year graded vesting schedule for employer matching contributions. The concept of vesting and how it works in today’s modern-day workforce is being rethought. The PlanSponsor article, “Has Vesting Gotten Controversial?” discusses the pros and cons of a vesting schedule for both an employer and an employee. One of the main concerns today for employers Is that employee turnover is very high. Having a vesting schedule can help a company both attract and encourage employees to stay for a more significant period of time.

OneDigital Retirement + Wealth Managing Consultant, Joe DeBello, thinks there may be more to this conversation than just vesting. He explains that while vesting schedules are important and impact lower-income parts of the workforce, he believes the more significant issue is retirement security and coverage for lower-income employees.

He goes on to discuss his thoughts on how vesting impacts the modern-day employee and how the conversation around employee benefits has made a significant shift over the past few years.

The employer is giving you money as an employee, and expecting loyalty in return. I think there is nothing wrong with that. But the conversation around vesting is changing, and I have to acknowledge that. The types of jobs out there are changing—there are more ‘gig economy’ jobs, and service jobs—and maybe the conversation about vesting needs to change, too.
— Joe DeBello, Managing Consultant, OneDigital Retirement + Wealth

To read the full PlanSponsor article, click here.

Want to read more from Joe DeBello? Check out his recent article: OneDigital Advisers Discuss ESG Investment Options Within DC Plans.