5 ms·
"Locked in" needs some clarification. For the overwhelming majority of defined benefit pensions, employees vest in (become qualified to receive) their benefits
by buckwheatone 5y ago
"Locked in" needs some clarification. For the overwhelming majority of defined benefit pensions, employees vest in (become qualified to receive) their benefits within the first 5 years of their service. They only need to wait until they've met the payout provisions of the plan...something like 55 years old and 10+ years of service for early retirement, for example.
What's more likely is that employees are sticking around because their years of service factors into their ultimate benefit payout once they retire. More years of service (up to a limit, typically) gets a higher benefit. And this probably only matters for the employees who've been around longest because the plan is probably frozen to new entrants.
The employee being quoted is weighing the value he'll get from adding 2 more years to his benefit formula vs going somewhere else for higher pay.