What do the terms vesting and locking-in mean?
The terms vesting and locking-in go hand in hand with respect to entitlement to pension benefits. Vesting means that an employee’s right to receive a pension benefit upon reaching retirement age is no longer dependent upon remaining in the service of Memorial University. Locking-in means that the accrued pension benefit cannot be refunded as a lump sum cash payment upon termination of employment — it must be used to provide a retirement income payable for life. This does not necessarily mean, however, that locked-in funds have to remain in the Memorial University Pension Plan. Subject to certain restrictions, locked-in funds may be transferred — upon termination of employment — to a locked-in retirement account (locked-in RRSP), another employer willing to accept the transfer or to an insurance company to purchase a deferred life annuity.
