Mandatory Partner Retirement Age Gets Scrutiny in Australia

The Australian arm of EY has decided to maintain its requirement that partners retire at 60.

CEO Tony Johnson told The Australian Financial Review that the decision was made after discussions with the firm’s partners, despite legal opinion that the clause violates the Age Discrimination Act.

“In consultation with elected representatives of the partnership, we recently considered the relevance of the retirement age and it was determined that it continues to operate as an appropriate marker to help partners plan and transition their lives financially and professionally,” he said. He added that “partner retirement and transition is also fundamental to effective succession planning across the organization.”

The Age Discrimination Act, which extends to partnerships, was introduced in 2004. It was widely believed that the law would eliminate mandatory retirement clauses. The Financial Review has been reporting that the clauses were often used at Big 4 accounting firms. KPMG agreements, for example, “expect” partners to retire at 58 and allows the CEO to determine if they continue beyond that age.

Questions were raised during a Senate inquiry into the future of work, during which an EY director, Louise Rolland, testified May 4. “The whole thing around EY’s situation, and I hope I’m not talking out of turn here, is that there has been a tradition in professional services firms to maintain a retirement age for partners,” she said.

Meagan Lawson, CEO of the NSW Council on the Aging, said the continued existence of retirement clauses among the big four had been a “genuine shock to me.”

“I think it’s clearly out of step with community standards at this point. We used to be a lot more accepting of sexual harassment too but we’re not anymore – and I think this is in the same vein.”

She said studies showed many people wanted to work beyond 60 and 65 and she was “genuinely surprised that people haven’t objected to this or taken action through the Age Discrimination Commissioner.”