Grandfather clause

A grandfather clause is an exception that allows an old rule to continue to apply to some existing situations, when a new rule will apply to all future situations. It is often used as a verb: to "grandfather" means to grant such an exemption. For example, a "grandfathered power plant" might be exempt from newer and tougher pollution laws. Often, such a provision is used as a compromise, to effect new rules without upsetting a well-established logistical or political situation. This extends the idea of a rule not being "retroactively applied".

People may be "grandfathered" to receive new benefits they are not otherwise entitled to. For example, if a company has a pension plan that after a certain date improves to include additional or superior benefits, those who have already retired may be "grandfathered in"; they may be granted the same improvements to their existing pension plan. Thus to some extent new rules are retroactively applied: not to past payments, but to past acquirements of rights to future payments.