According to Legal Week, under the previous system, someone who made partner before 2005 could opt to take early retirement between the ages of 50 and 55 and receive five years of pension payments equaling up to 25% of plateau profits. The new early retirement rule is based on years of service.
Under the new rule, those who attained partnership before 2005 who have 15 years of service are entitled to a pension of about 17% of plateau profits for the five years after retiring. For partners with 20 years or more of service, that figure will increase to a cap of 23% or a financial limit of £276,000.
The switch from age to years of service means more partners will qualify for the payments, costing the firm more to operate. However, the reduction in maximum available annuity will save Clifford Chance an estimated £15 million over the next 30 years.
“We took the view that there were elements that were against age discrimination rules so they should be changed even though we thought it unlikely that partners would challenge the arrangements,” executive partner Chris Perrin told Legal Week.
Chicago-based Sidley Austin was called out by the Equal Employment Opportunity Commission for an alleged discriminatory retirement policy. After the EEOC was given the go ahead to pursue the case (See Supreme Court Turns Away Law Firm Age Discrimination Case ), the law firm decided to settle the matter (See Sidley Austin Decides to Settle ADEA Suit ).