Freshfields Bruckhaus Deringer is set to curtail significantly its treasured partners’ pension scheme.
It is understood that proposals aimed at reducing the cost of the pension scheme will be put to the partnership council for approval this week. The move follows a controversial review that was kicked off by outgoing senior partner Anthony Salz earlier this year (The Lawyer, 4 April).
Freshfields currently operates an unfunded pension scheme, meaning contributions are made into the fund out of the annual profit. The magic circle firm is the only one in the City whose current partners fund the retirement of previous partners. Most other firms abolished this system more than 10 years ago.
Under the existing regime, retired partners are entitled to receive a share in the profit in any given year. It is understood that a partner retiring aged 55 or over would get one-fifth of the amount a working partner receives that year. This is, however, subject to a 10 per cent cap on the total annual profit. One proposal being considered is believed to be a reduction to the cap.
Commenting on the review, one partner said: “Everybody’s going to be affected on a pro rata basis. But it’s not going to affect the current generation of retired partners, because we’re nowhere near the cap.”
Freshfields previously attempted to reform its pension scheme 12 years ago, but in an unusual move for such a consensual firm, the change was blocked.