Forfeiture Of Vested Benefits
What Does Forfeiture Of Vested Benefits Mean?
In the context of insurance, the forfeiture of vested benefits refers to the legal process by which a beneficiary loses their rights to the benefits they would otherwise have been entitled to. This may occur due to a breach of contract or failure to meet certain conditions outlined in the policy.
Insuranceopedia Explains Forfeiture Of Vested Benefits
The Employee Retirement Income Security Act (ERISA) is a law that regulates employee benefits, including pension plans, and establishes minimum standards for these plans. Under ERISA, the forfeiture of vested benefits can occur if a beneficiary:
- Experiences a break in service with the employer, or
- Terminates employment before completing the required years of service and/or the vesting period.
Employers may also establish additional conditions that, if unmet, may lead to the forfeiture of vested benefits. These may include termination of employment for cause or a conviction of a felony that violates the employee’s oath of office.
