Unfunded pension obligations in law firms

March 1st, 2012 by Altman Weil

Unfunded and underfunded pension obligations in law firms can pose serious problems for law firms, as illustrated in The American Lawyer’s cover story this month.

“The recession, with its double whammy of retirement investment portfolio declines and firm revenue slowdowns, was a broad wake-up call for firms that fund pensions out of current income, as well as for the broader swath of firms that fund benefits out of firm-run investment portfolios. Many in the latter category had to dig into earnings to cover shortfalls in guaranteed benefits funded by firm investments. But the problems created by the sagging economy brought into relief a bigger, looming issue: The ranks of retired partners is swelling just as the number of equity partners—who are ultimately responsible for funding the pension plans—is leveling off.”

Read it at The American Lawyer

Of course this is not a new problem but, as the article points out, one that has been exacerbated by the recession.   In 2002 Altman Weil principal Ward Bower wrote an article on Retiring Unfunded Obligations with advice that is still relevant in 2012.

Read it at Altman Weil  

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