Mandatory retirement might seem like a relic but it remains common at accounting firms. Most top firms require partners to exit between the ages of 60 and 66.
One firm in the top 100, PKF O’Connor Davies LLP, turns the practice upside down, seeking out and hiring senior accountants who have aged out at other firms.
The New York-based firm, which employs around 750 people, has more than 24 accountants and advisers on staff who arrived after hitting retirement ages at other accountancy firms. The majority work three or four days a week.
“We think being flexible is a goal,” says Christopher Petermann, a partner who sits on PKF’s management team and human resources committee. “There are a lot of people at other organizations who ‘time out’ based on age that still have tremendous value,” he adds.
Research shows many older Americans hope to continue working, either out of financial need or a feeling that they have many productive years ahead of them. A 2017 paper published by the National Bureau of Economic Research finds that about 60% of retirees would return to the workforce if they could find jobs with a flexible schedule.
Bringing on senior accountants has helped PKF expand into new practice areas and improve training and mentoring, Mr. Petermann says. Its older hires bring with them a lifetime of contacts and expertise.
A few years ago, PKF brought in an accountant, now 77, who had strong experience with international tax issues at a large firm. It was an underdeveloped practice for PKF but an area “we needed to be better in,” says Mr. Petermann. Thanks to that hire, “it’s now one of our rapidly growing markets.”
Retirement wasn’t appealing to Larry Baye, age 64, who has been at PKF for almost two years. He was required to leave a large global accounting and consulting firm at age 62, around the same time that back troubles started restricting his activities. A headhunter connected him with PKF. Now a principal with the firm’s risk-advisory practice, he works three days a week.
“This gives me the opportunity to be very hands-on,” he says. “What’s important is I can use my mind, mentor others, and clients say ‘thank you.’”
Large accounting firms such as Deloitte, Pricewaterhouse Coopers LLP, Ernst & Young LLP and KPMG use mandatory retirement to help with their succession planning, making it easier for younger accountants to rise through the firms’ ranks.
Forced retirement is typically illegal under the Age Discrimination in Employment Act. But most accounting firms are structured as private partnerships, and federal regulators make exceptions for certain executive-level or ownership positions. In recent years, the Equal Employment Opportunity Commission has questioned such forced retirement agreements at accounting firms, but hasn’t taken legal action against them.