The law does not, however, address the issue of crediting service toward tenure with the employer or crediting service under a benefit plan, such as a retirement income plan. By law, a retirement plan does not have to credit service during periods of non-work. In addition, if the period of non-work exceeds certain thresholds, a retirement plan may require that returning employees once again meet certain service requirements before rejoining the plan. In general, these rules vary by the amount of service under the plan prior to the break and the length of the break. Further, if the individual was not vested prior to the break in service, if the break is longer than the prior service, that prior service may be disregarded.
Special provisions designed to avoid breaks in service exist under certain circumstances.
For example, certain periods of absence for maternity or paternity reasons must be treated as though the individual was at work. While the credited service proposal would apply to both defined contribution and defined benefit retirement plans, the second proposal, to expand the options for survivor protection, is specifically geared toward defined benefit plans. Benefits are not guaranteed. Payments are usually made in a lump sum at retirement, although employees may have the option to receive payments over time. In contrast, a defined benefit plan specifies a formula for determining future benefit amounts, typically based on earnings and years of service.