Since 1993, defined benefit plan offerings for legal and paralegal staff have declined from 54% to 28% among the 43 firms polled in Segal’s Survey of Retirement Benefits at Large Law Firms . Of the DB plans offered to staff, one-third were currently frozen.
For partners however, the story is slightly different. For these higher-level employees, the rate of DB offerings has actually risen since 1993 from 30% to 37%. Only one in sixteen of these plans is currently frozen.
Although 65 is the normal retirement for a large majority of the firms, 25% of firms say that their average partner retirement age is lower. At 90% of the firms polled partners are allowed to retire below the age of 55.
Corresponding with this decrease in the number of DB plans offered to regular law firm employees is a rise in the number of 401(k) cash or deferred arrangements offered. In 1993, 98% of firms offered such plans; now, 100% of firms do so. Under these plans, the most common maximum match is 2%, whereas in 1993 this figure stood at 3%. Eighty-six percent of such plans allow loans from a 401(k) plan for all employee groups; 95% allow employees complete control over their assets.
Besides 401(k) plans, other DC plans have become more prevalent since 1993 (86% now, 54% then). Non-qualified retirement plans for partners have slightly decreased, however, from 54% in 1993 to 47% now.
In another Segal survey released at the same time – the Segal Survey of Health and Welfare Benefits at Large Law Firms – it is shown that such firms were among the last employers to embrace managed care for medical benefits. However, as of 2003, managed care was the most accepted type of medical care at such firms. Preferred Provider Organizations (PPOs) were the most common type of plan offered (82%), followed by Health Maintenance Organizations (HMOs) at 58%.
A majority of firms offered medical coverage to employees’ domestic partners, it was reported, and 66% of those that offered such coverage gave it to both opposite- and same-sex couples.
Cost sharing was almost equal for all types of plans offered, with the employer picking up around 38% of total costs for all types of plans offered. However, the survey did find that more senior employees were often asked to contribute more to their health coverage than lower level employees were, with a range of 15% to 25% seen.
With skyrocketing medical costs, law firms stuck to two main cost management strategies: increased employee contributions (used by 64% of firms) and negotiations with current carriers (50%).
« Man Who Cashed Dead Mother's Pension Checks Sentenced to Jail Time