In most of the persistent games I've played in (fantasy boffer games & World of Darkness MET games), characters could be played for as long as they survived within the system. For very long-running games, this could mean that a particular PC has ten years' worth of experience on his sheet (I've seen it). Even for games which haven't been running for a decade, older PCs still have a significant power advantage over new and mid-level PCs.
This, unfortunately, has the side effect of creating several problems for the games. I've seen this occur in both World of Darkness and fantasy games, and the issues tend to be the same from system to system.
First off, power creep. In order to provide a sufficient challenge for the high-powered PCs, the Storytelling Staff has to continuously devise newer, stronger villains with more puissant powers. If the power creeps high enough, then only the high-powered PCs become the ones capable of facing the villain; everyone else is sidelined. And why should the low-to-mid power PCs get involved? The established PCs can do everything and know everything anyway. And since the rules for such high-level encounters are so complicated, each encounter takes up Storyteller resources. While the high-level PCs are fighting the bad guys, the other characters run the risk of being neglected.
Related to that is player perception. A new player coming into a game with these high-powered PCs can look around, and realize that he or she will never be able to displace them. An attendant risk in PvP games is that new players will lose more characters than older ones, which also creates feelings of frustration. Such feelings can be quite disheartening, and turn new players off what might otherwise be a wonderful game. After all, an established PC usually has enough defenses and combat ability to be able to survive conflict; while a new PC does not.
Some games have come up with a variety of solutions to this problem. The Mind's Eye Society (formerly Camarilla Fan Club) usually does a full chronicle reset every five years or so - the world 'ends', and a new one begins, with all-new characters and plotlines. Other systems give new players a significant XP boost when creating their character. While this helps those players be able to survive and feel effective, it however does nothing to solve the problem of power creep. Some games insist there is no problem, or that such a disparity is part of the setting, or that long-term players should be rewarded and new players should expect to prove themselves. Well, I don't necessarily object to that sentiment, as long as it's made clear to me who that game views as priority. But most games do want to recruit new players and do want everyone to be able to have fun.
And so I want to talk about a mechanic I've seen used to great effect - the character retirement cap.
This is a mechanic used by Dying Kingdoms, a game I played in for several years and now serve on Campaign Staff for. The basic rule is: once your PC hits a specific point threshold, you must begin talking with Staff about your retirement arc. You have quite a bit of leeway on how you want your story to end. Some players have written their own assassination; others have ascended to positions of political power. Either way, your character decides to retire from the adventuring life and retreats to the background. They might make cameo appearances as the story requires, but for all intents and purposes, they are not your active PC any longer; time to make a new one.
If a player consistently attends every game, this threshold is reached in about two or three years. Players with more intermittent attendance will obviously take longer, but even the most dedicated player can reasonably expect several years' worth of playtime with their PC. In addition, players who have gone through this cycle once get a retirement benefit - they now have access to special mechanics, which brand-new players cannot have on their first starting PC.
The retirement cap solves many of the problems listed above. Power creep is no longer much of an issue. Though the power level of the player base will ebb and flow, it will never go past a certain point. A challenging villain in 2006 will still be a challenging villain in 2012.
Players also take turns being the one in charge. A given PC might, after a year or so of play, come to be a respected, powerful leader. However, this PC must eventually step down and make way for a different character to become the leader. And that PC must also eventually step down, and a different PC steps up. A character can receive a potentially game-breaking power... three games before permanent retirement and their chosen epic send-off. And players get a chance to explore a variety of different concepts - after retiring your brutal warrior, you can come back as a gentle healer or savvy politician.
I personally think this rule also combats a sense of entitlement some players seem to feel over their PCs. If their character has survived long enough to become powerful, they should be entitled to keep playing their character - regardless if this is a good or bad thing for the game as a whole. However, the retirement mechanic obviates such a feeling. It creates a sense of 'we're all in this together'.
And so, I encourage game masters and storytellers to strongly consider implementing this mechanic in your game. It might cause a bit of pain at first, especially for established games, but I believe the payoff in the end will be quite worth it!