KPMG is to cut more than 100 jobs and slash contributions to employees’ pension pots as part of a cost-saving drive accelerated by the coronavirus pandemic and looming reform of the audit profession.
Sky News has learnt that the big four accountancy firm has decided to axe just under 200 jobs across its UK workforce, the latest sign of how professional services giants are being forced to contend with growing structural headwinds.
KPMG partners and affected employees were informed about the proposals in a briefing by Bill Michael, its UK chairman, on Wednesday morning.
Under the plans, roughly 100 jobs will go from its 3000-strong consulting practice, with a similar number to be cut from its internal business services function.
KPMG is also launching a consultation on reducing employer pension contributions to 4.5% of salaries, a move that will disproportionately affect older staff on more generous retirement funding arrangements.
A person close to the firm said roughly 20% of employees would be affected because, with an average age of 27, most KPMG staff already had pension deals entitling them to employer contributions of 4.5%.
That move echoes a similar one adopted by rival Deloitte earlier in the COVID-19 crisis.
Sources said Mr Michael also told staff that KPMG was reviewing options, including the possible closure, of Makinson Cowell, a consultancy bought by the firm in 2013.
Makinson Cowell provides advice to blue-chip companies, many of them in the FTSE-100, about investors’ views, and has been well-regarded in the City for many years.
One insider said KPMG was examining options for the business, which employs 25 people, as part of “a streamlining of core services”.
Restrictions on consulting work for audit clients are also a factor in the review, the insider said.
Mr Michael told partners on Wednesday that although the firm’s performance during the pandemic had been ahead of expectations, it had accelerated the need to create a more agile business, with a firm-wide initiative to retrain and redeploy workers expected to be unveiled in the autumn.
The developments provide the latest evidence of how big four firms are being buffeted by the economic fallout from COVID-19, even as some business areas such as restructuring and insolvency work see soaring demand as a result of the crisis.
In a memo revealed by Sky News in April, Mr Michael described the coronavirus outbreak as “an economic disaster”.
Deloitte, EY, KPMG and PricewaterhouseCoopers are facing a demand from the audit regulator, the Financial Reporting Council, to submit plans for how they envisage ‘operationally separating’ their audit and consulting businesses by 2024.
Their proposals must be tabled during the autumn.
The drive for audit reform was sparked by the failures of a string of big companies, including BHS and Carillion, with accountants handed a multitude of multimillion pound fines in the last few years for perceived failures in the quality of their work.
Responding to an enquiry from Sky News, a KPMG spokesman said: “Due to changing demand from our clients as a result of the COVID-19 pandemic, we have announced proposals to make fewer than 100 positions in our consulting business redundant.
“Our consulting practice employs more than 3,000 people and is continuing to see high demand for a range of core services such as digital transformation, supply chain management and cybersecurity.
The spokesman added that the other job cuts had been accelerated by “a change in demand for some areas of our internal support provision and as a result we are proposing to make fewer than 100 roles within our business services function redundant”.