KPMG is reviewing its legally dubious compulsory retirement age of 58 for partners after rival EY dropped a similar clause and as Deloitte faces a landmark lawsuit over its age-based retirement policy.

KPMG board to do review
The review of partnership agreement will be conducted by KPMG’s board and also examine other provisions around partner retirement at the firm. No timing for the review and any subsequent vote was given.
The age-based retirement rules are generally used to exit older and more expensive partners at these firms to make way for younger partners.
Removing the clause will provide older partners with an extended career path as other natural pathways, such as joining a corporate board, become more difficult, but will also put them under more pressure to continue performing.
It could also mean that younger aspiring partners are forced to wait longer to enter the partnership.
The use of these clauses was first highlighted in a series of stories by The Australian Financial Review in 2018 and is now back into the spotlight thanks to a landmark legal action by Deloitte partner Colin Brown.
Mr Brown, 64, is suing his firm and its chief executive, Richard Deutsch, for age discrimination over the firms mandatory retirement age” of 62 for partners.
In July, EY dropped the clause in its partnership agreement requiring partners to retire at 60, while PwC does not have a specified retirement age but partners there say they are expected to retire at 55.
KPMG defends clause
KPMG is the only firm that continues to have a specific age-based clause in its partnership agreement, asking partners to retire at 58.
As recently as this month, the firm defended calls to remove the age-based clause by saying its leaders are aware of the rule when joining and are “treated fairly” on the way out.
That argument didn’t impress Minister for Finance Mathias Cormann who, when asked about KPMG’s retirement clause, told the Financial Review that age-based restrictions “are a relic of the past”.
Senator Cormann also flagged that the Commonwealth Procurement Framework requires suppliers follow the law meaning the $200 million-plus that KPMG pulls in revenue from Commonwealth contracts annually could be at risk.
Adding further pressure on KPMG to remove the clause is a joint statement issued by the Australian Council of Human Rights Authorities on Friday, which criticised KPMG’s retirement clause as “firmly against the principles and purpose” of age discrimination laws.
The council comprises the federal, state and territory commissioners of human rights, equal opportunity and anti-discrimination authorities.
Issues of age discrimination are very important to ACHRA members. Our various members note that while the specific provisions in equal opportunity/anti-discrimination legislation vary around the country, an enforced voluntary retirement age goes firmly against the principles and purpose of such legislation,” the joint statement said.