Allen & Overy battles £26.2m pension hole” />Allen & Overy (A&O) partners have been subsidising a multi-million-pound hole in the firm’s staff pension fund for the past four years, it has emerged.
The total deficit stood at £26.2m, or £85,000 per partner, at the end of the 2005 financial year, the most recent year for which the firm’s limited-liability partnership (LLP) accounts were available. This year the figure is likely to drop to around £22m, but it will still take A&O a total of 10 years to clear the deficit entirely.
The firm’s partners have been paying a total of £2.4m every year since 2002 to deal with the deficit in its final-salary scheme.
The magic circle firm pays a total of £3.8m into its fund every year, of which £2.4m goes towards paying off the deficit. The firm closed its final-salary scheme to new members in 1998, replacing it with its current money-purchase scheme.
The figures, which are publicly available at Companies House, hint at the scale of pensions liabilities among all the leading firms in the UK. As an LLP, A&O is obliged to file its accounts within 10 months of the end of the financial year. It must include details of its pension deficit and the assumptions made to arrive at the estimate. Non-LLP firms, however, are under no such obligation.
As A&O finance director Ian Dinwiddie said, details of the deficit were “very open” in the notes in its accounts. “I’d be very surprised if the other major firms didn’t have liabilities equal to or greater than ours,” added Dinwiddie. “But you won’t see it until they publish their accounts.”
The hole in A&O’s pension fund, which Dinwiddie described as “a long-term” liability, was unearthed during research by accountant Smith & Williamson into the level of pensions deficits among the available law firm LLP accounts.
Acording to Smith & Williamson director Giles Murphy, A&O’s £85,000-per-partner deficit is the largest it has found.