Fully vested

The fully vested concept refers to the point at which a person has the right to obtain the full amount of a benefit. The vesting concept is most commonly applied to stock options and retirement benefits. Vesting can either occur gradually over a period of years (such as 20% per year) or in full at the end of a designated period (such as 100% at the end of five years). The latter example is referred to as cliff vesting. The intent behind requiring full vesting is to encourage employees to remain with a business for an extended period of time. If they leave prior to the point of full vesting, then they may lose a substantial amount of benefits.