4 ms·

Is this article talking about 401k in the the US? If so, it’s fairly common for a 401k match to vest over two years.

rcme 4y ago
It’s fairly common, but also insane in a world where the average tenure at a company is a few years. Basically a way to say you contribute to a 401K without actually contributing anything.
- dv_dt 4y ago
  It’s a way potential employees will understand as devaluing the benefit. Basically making it likely a pointless inducement to join. About 50/50 of the companies I joined offered 401k matching vested immediately.
  - DangitBobby 4y ago
    The first company I worked for started offering a 401k about 1 year into my employment there. I remember seeing the low percentage match and 2-year vesting schedule as kind a bit of cheap-skate middlefinger, and declined the benefit. Probably did more harm than good to offer it.
    - dv_dt 4y ago
      2-5% match is pretty good imho. Any match percentage is basically doubling your savings. If the vesting is good, save up the the limit of match. With tech industry salaries higher 401k matches would just hit the max limit for 401k frequently. The vesting time is the cheap thing. Though once for me, the vesting was still valid if you left the company - it was just delayed.
- MobiusHorizons 4y ago
  Sounds like it could be viewed as a small incentive to stay, which given the short average tenure is probably a good thing. High churn rate is not generally a good thing for businesses or products regardless of the individual benefits.
jmyeet 4y ago
Amazon does this. Most other tech companies do not (eg pretty much any other FAANG).
- balefrost 4y ago
  Nor any other non-FAANG company I've ever worked for. In my experience, 401k matches are immediate.
  - loeg 4y ago
    EMC had a three year 401k match vest schedule in the 2010s. I think they’re on immediate like everyone else now, but don’t remember.
  - sokoloff 4y ago
    This article (citing a registration-wall report) says only 28% of employees offer immediate vesting on employer matches. https://www.cnbc.com/amp/2021/06/17/most-workers-wait-years-for-company-401k-matches-to-vest.html https://www.cnbc.com/amp/2021/06/17/most-workers-wait-years-...
PopAlongKid 4y ago
It is about a small number of employees in Ireland. Maybe "Ireland" should be added to the title? (copied from my other reply)
JimDabell 4y ago
From the article: > Stripe cut around 90 jobs from its Dublin office as part of a wider restructuring of its global operations, which saw it reduce its overall workforce by 14 per cent from 8,000 employees down to around 7,000 today. > The pension clawbacks, which are legally permitted under Irish pension rules, only applied to staff who had been working with the company for less than two years.
Mountain_Skies 4y ago
My first job out of college in 2000 had a two year vesting schedule. Every job since then has been immediate vesting, though one did wait until 90 day after starting work before matching started. Two year cliff vesting probably still exists but ends up not saving the company a whole lot compared to the bad impression it gives to potential employee candidates.
Macha 4y ago
Ok, so the way Irish pensions work (which is the topic here): 1. You may put an age related maximum percentage of your income into the pension fund (10% up to 30 years, 5% increase every 5 years thereafter). This is invested by a registered pension fund on your behalf. It is exempt from capital gains tax, deemed disposal on index funds, or other types of taxes that normally apply to investments. 2. Your employer may match an amount up to your contribution. Most employers in the tech sector will offer between matching the first 5% to first 10%. While this is income from your employer, to you, it is not considered for income tax purposes. 3. You are normally not allowed withdraw any of this prior to age 50. 4. _However_, if you leave a job with an employer managed pension within 2 years, you can instead refund your entire contributions and either keep them or invest them in your new pension scheme. This is to avoid people having to manage N number of pension schemes from however many former employers. If you choose to do this however, the tax-free status of the employer contributions vanishes. So they get refunded to your employer, and if your employer wanted to give them direct to you, that would be taxable income. Most employers won't want to bother with the paperwork for this. 5. When you draw down your pension, you may pay income tax on the payouts if your pension payouts exceed the tax-free cutoff.
- DangitBobby 4y ago
  > if you leave a job with an employer managed pension within 2 years, you can instead refund your entire contributions and either keep them or invest them in your new pension scheme What happens if you leave in 3 years? Is it a 2-year window that vests or once vested forever vested?
  - Macha 4y ago
    For N > 2 years, everything in the fund is tax-exempt (even funds contributed less than 2 years ago), but you no longer get the option to refund your contributions to cash when moving, you need to wait until you're 50 to start withdrawals.

rcme 4y ago

It’s fairly common, but also insane in a world where the average tenure at a company is a few years. Basically a way to say you contribute to a 401K without actually contributing anything.

dv_dt 4y ago
It’s a way potential employees will understand as devaluing the benefit. Basically making it likely a pointless inducement to join. About 50/50 of the companies I joined offered 401k matching vested immediately.
- DangitBobby 4y ago
  The first company I worked for started offering a 401k about 1 year into my employment there. I remember seeing the low percentage match and 2-year vesting schedule as kind a bit of cheap-skate middlefinger, and declined the benefit. Probably did more harm than good to offer it.
  - dv_dt 4y ago
    2-5% match is pretty good imho. Any match percentage is basically doubling your savings. If the vesting is good, save up the the limit of match. With tech industry salaries higher 401k matches would just hit the max limit for 401k frequently. The vesting time is the cheap thing. Though once for me, the vesting was still valid if you left the company - it was just delayed.
MobiusHorizons 4y ago
Sounds like it could be viewed as a small incentive to stay, which given the short average tenure is probably a good thing. High churn rate is not generally a good thing for businesses or products regardless of the individual benefits.

jmyeet 4y ago

Amazon does this. Most other tech companies do not (eg pretty much any other FAANG).

balefrost 4y ago
Nor any other non-FAANG company I've ever worked for. In my experience, 401k matches are immediate.
- loeg 4y ago
  EMC had a three year 401k match vest schedule in the 2010s. I think they’re on immediate like everyone else now, but don’t remember.
- sokoloff 4y ago
  This article (citing a registration-wall report) says only 28% of employees offer immediate vesting on employer matches. https://www.cnbc.com/amp/2021/06/17/most-workers-wait-years-for-company-401k-matches-to-vest.html https://www.cnbc.com/amp/2021/06/17/most-workers-wait-years-...

PopAlongKid 4y ago

It is about a small number of employees in Ireland. Maybe "Ireland" should be added to the title? (copied from my other reply)

JimDabell 4y ago

From the article: > Stripe cut around 90 jobs from its Dublin office as part of a wider restructuring of its global operations, which saw it reduce its overall workforce by 14 per cent from 8,000 employees down to around 7,000 today. > The pension clawbacks, which are legally permitted under Irish pension rules, only applied to staff who had been working with the company for less than two years.

Mountain_Skies 4y ago

My first job out of college in 2000 had a two year vesting schedule. Every job since then has been immediate vesting, though one did wait until 90 day after starting work before matching started. Two year cliff vesting probably still exists but ends up not saving the company a whole lot compared to the bad impression it gives to potential employee candidates.

Macha 4y ago

Ok, so the way Irish pensions work (which is the topic here): 1. You may put an age related maximum percentage of your income into the pension fund (10% up to 30 years, 5% increase every 5 years thereafter). This is invested by a registered pension fund on your behalf. It is exempt from capital gains tax, deemed disposal on index funds, or other types of taxes that normally apply to investments. 2. Your employer may match an amount up to your contribution. Most employers in the tech sector will offer between matching the first 5% to first 10%. While this is income from your employer, to you, it is not considered for income tax purposes. 3. You are normally not allowed withdraw any of this prior to age 50. 4. _However_, if you leave a job with an employer managed pension within 2 years, you can instead refund your entire contributions and either keep them or invest them in your new pension scheme. This is to avoid people having to manage N number of pension schemes from however many former employers. If you choose to do this however, the tax-free status of the employer contributions vanishes. So they get refunded to your employer, and if your employer wanted to give them direct to you, that would be taxable income. Most employers won't want to bother with the paperwork for this. 5. When you draw down your pension, you may pay income tax on the payouts if your pension payouts exceed the tax-free cutoff.

DangitBobby 4y ago
> if you leave a job with an employer managed pension within 2 years, you can instead refund your entire contributions and either keep them or invest them in your new pension scheme What happens if you leave in 3 years? Is it a 2-year window that vests or once vested forever vested?
- Macha 4y ago
  For N > 2 years, everything in the fund is tax-exempt (even funds contributed less than 2 years ago), but you no longer get the option to refund your contributions to cash when moving, you need to wait until you're 50 to start withdrawals.