Allen & Overy has increased pay for its trainees, after it upped its newly qualified (NQ) associate pay packages earlier this summer.

The Magic Circle firm will now pay first-year trainees £46,500 – an increase of £1,500 from £45,000.

Second-year trainees will see a slightly higher increase of £2,500 to hit £52,500 in pay.

The firm has also announced a trainee retention rate of 89%. Some 40 trainees out of 43 were offered positions, with 39 accepting.

This week, A&O's Magic Circle rival Freshfields Bruckhaus Deringer also announced its retention figures, with all those who were offered NQ positions – 38 out of a cohort of 41 trainees (93%) – opting to stay with the firm.

In June, A&O announced its NQs will take home a minimum of £100,000 a year after it increased the available pay package, which includes salary and discretionary bonus rates.

All NQ associates are eligible for a discretionary bonus, according to a firm spokesperson.

Previously, NQs at the firm were paid £83,000 but this did not include any bonus figure.

Firms have entered the annual scrum to raise rates, which this year has seen a number of firms increase NQ pay to top £100,000.

Freshfields fired the starting pistol for the increases in May, bolstering NQ pay to £100,000, while Linklaters became the last of the Magic Circle firms to match that rate last month.

Other firms to have increased pay include Hogan Lovells, where pay can now reach £117,000 for NQs. Herbert Smith Freehills stretched the total available pay for its NQ associates to £105,000 last month.