Written By Jack J Collins, Editor, AllAboutLaw.co.uk

Long-term Partners? Later retirements could block careers

Written By Jack J Collins, Editor, AllAboutLaw.co.uk

Changes to the pension schemes could mean that partners retire later, blocking the career paths of up and coming lawyers, an accountancy firm has warned.

A partner's meeting in a few years time...

Over the course of recent years, those earning top salaries have faced cuts in the amount they can contribute to their pension, and this is set to peak in April 2016.

From the new financial year, those earning over £150,000 per year will have their tax-relieved pension allowance cut to £10,000. Currently, anyone paying into a pension is entitled to tax relief on contributions up to £40,000.

Because very few firms specify a retirement age due to laws against age discrimination, younger lawyers are worried about their paths to the very top being blocked by longer service from those currently occupying the posts.

Of 95 law firms surveyed by Smith & Williamson, over half said they were expecting a rise in retirement ages, and that this would affect their opportunities for taking on new partners, as well as planning for successions.

Mike Fosberry, Smith & Williamson’s financial services director, stated: “We are increasingly seeing partners retiring later as they haven’t been in a position to be able to make adequate pension provision, which has been exacerbated by recent changes to pension contributions.

“The danger firms have got is it is creating blockage at the top of the partnership, where they can’t promote the new partners as the older partners stay on.”

The accountancy firm is worried that the delaying of partner retirements will compromise recruitment, promotion and development of a younger generation, who will end up stifled.

They recommend that firms support their partners in making financial arrangements, so that they are able to set themselves up for a comfortable retirement without relying solely on a pension fund.

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