Retirement Plans;

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Don't make the common mistake of building a long vesting schedule into your company's retirement plan in hopes of discouraging employee turnover. You just may be successful -- giving unmotivated employees a reason to hang on when they should be replaced.

One company that has avoided this pitfall is Sonalysts Inc., an operations-research firm in Waterford, Conn. Shortly after the company was founded in 1973, the company instituted a pension plan with an exceptionally short vesting period -- 25% a year, up to 100% in four years. Thereafter, employees could take the money and run. Most haven't. "Our turnover is very low for our business," says Muriel Hinkle, president of the 300-employee firm. The program has helped the company attract top employees, she adds, and they stay because they like their work, not because they're waiting to collect their retirement benefits.

Last updated: Jan 1, 1987




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