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Coach
I am a 47 year old Partner at another B4 Firm. We still have traditional Defined Benefits model. I became a Partner when I was 42 and our mandatory retirement age is 60. When I retire at 60, my pension will be approximately $550K per year based upon my income projections. If I retire at 58, it’s going to drop to $400K (big dip) and so on so forth. You get the most value from being there until 60.
With all due respect hoping everyone makes it to 60
Do Partners worry that the unfunded pension plans won’t actually be there?
I assume it takes a supermajority of current partners to change the plan - what if the current partners didn’t want to (or couldn’t) keep paying into the plan?
Since you are from EY (as am I) I will share the pension changed a few years ago and there is no longer vesting in the traditional sense. However, the pension benefits increase significant the older you get, which is the enticement to stay. Meaning a 50 yr old better has more $ deferred than a 40 yr old. I would ask a partner you trust to share more details.
No. MDs have similar pension plan as all other employees but I honestly don’t know specifics. The $500k is not a good number to rely on. This type of number assumes you become partner young and stay until full retirement age. And a million other variables go your way and the firm doesn’t collapse. EY’s new plan is cash based and Fully funded. For me as a young partner, I like the flexibility that provides. I will never hit the top end as I don’t expect I will want to work until 60.
I think you have to stay partner till the mandatory retirement age of the firm
How does it work for the Partners who are are either a direct hire or are in an internal role.. like a Partner in IFS in PWC. Is the pension funded the same way for people in non-revenue generating roles?
Appreciate the insight. Is 500k considered average pension amount or on the higher side?
Coach
I would say it’s slightly on the higher side but not that much. I have seen a couple of Partners get $800K pension but they made Partners before they were 35 apparently.
Going by this post... looks like choosing FAANG for rsus is basically a joke as compared to a B4 partner comp in the long term - 500k pension is unheard of in any other Industry. I know only a fraction of people will get to B4 partner.. but even the most senior levels roles at FAANG can’t beat the lifetime earnings of a B4 or MBB partner. I am still in the early stages of my career and exploring my future options (b4, MBB, FAANG, startup, business etc.) and so far MBB and B4 partnership track looks to be most lucrative $$wise.
I’d rather have 1000% return on faang tesla etc while I’m 35 instead of 500k in perpetuity after 60. Lots of 40 year old millionaires working for these companies. Find your next faang ....and enjoy your work.
I know pension at Big 4 the same whether it’s consulting vs. accounting/tax? Also, I know this is more consulting focused, but would these pension plans also be pertinent to firms like RSM, BDO, GT, Crowe, BKD, etc?