Because 23 years later, few New York professional services firms have followed in Weil Gotshal's footsteps. Instead, many are now sitting on ticking time bombs in the form of unfunded retirement promises made to aging and retired partners, which threaten to tear these companies apart. A wave of baby boomers will be retiring from such New York Area firms in the next decade, but their promised pensions all too often have not been funded. Younger partners, who are left to foot the bill from their own salaries, are now in many cases revolting against costly eleventh-hour retirement demands, creating a potentially lethal mix. Unfortunately, legal and accounting firms cover new retirements predominantly by skimming off partners' salaries only when the older partners retire, because they do not see partner buyout plans as a cost of doing business .
Experts say there are several ways to trim runaway retirement buyout cases.
Many professional services firms now excuse themselves altogether from retirement programs, leaving the onus on partners to prepare for their own financial futures. Some experts don't think this is such a bad idea. Its like Social Security. It's hard to unwind from them once you are in. However, that approach will benefit only younger partners, who have more time until they retire and who are often more willing to manage their own retirement funds.