The professional body for both the representative and regulatory service is considering ditching its final salary pension scheme and is reviewing its salary structure, which has seen employees enjoy average pay rises of more than 6%, after declaring its current system is “unaffordable and unfair”.
Performance-related pay is likely to be introduced for all staff, replacing a system in which staff are rewarded for cost-of-living increases and annual salary increments based on length of service. The old scheme has seen salaries rise significantly ahead of inflation, it is conceded.
The Law Society is also likely to close its final salary pension scheme, following a funding deficit of £71m in 2004 which has seen the body pump £64m into the fund. Trustees have since asked for a further £40m over the next four years to plug the hole, with a request for a further £24m-£40m thought to be on the way.
The society blames the rising deficit on the change in life expectancy. The enhanced scheme could see the society contribute £1.50 for every £1 contributed by the employee.
Chief executive of the representative arm Des Hudson branded the current scheme as “unsustainable, unaffordable, unfair and uncompetitive”, saying that after the implementation of the Legal Services Act, other bodies may compete with the Law Society for representative and regulatory activities.
He explained the need for the review in a series of presentations and has begun a review with staff and trade union Amicus. He said the society could afford the current pensions obligations but is seeking a short-term alternative to the current pay system for 2008.
