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| RBS boss does 'the right thing' | RBS boss does 'the right thing' |
| (about 1 hour later) | |
| Former Royal Bank of Scotland chief Sir Fred Goodwin has done "the right thing" in reducing his controversial pension, the chancellor has said. | Former Royal Bank of Scotland chief Sir Fred Goodwin has done "the right thing" in reducing his controversial pension, the chancellor has said. |
| Sir Fred has agreed with RBS to reduce his pension by £200,000 a year. The government has also accepted the deal. | Sir Fred has agreed with RBS to reduce his pension by £200,000 a year. The government has also accepted the deal. |
| He had already reduced his £703,000 pension by taking a lump sum of £2.7m. He will now receive £342,500 a year. | He had already reduced his £703,000 pension by taking a lump sum of £2.7m. He will now receive £342,500 a year. |
| RBS chairman Sir Philip Hampton said it marked a "very substantial reduction" but unions called it a "small gesture". | RBS chairman Sir Philip Hampton said it marked a "very substantial reduction" but unions called it a "small gesture". |
| The government has a say in the pension deal because it owns 70% of RBS as a result of a £20bn bail-out. | The government has a say in the pension deal because it owns 70% of RBS as a result of a £20bn bail-out. |
| Chancellor Alistair Darling said he was "very glad" the matter had been resolved. | Chancellor Alistair Darling said he was "very glad" the matter had been resolved. |
| "I think that Sir Fred, in handing back part of his pension, is doing the right thing," he said. | "I think that Sir Fred, in handing back part of his pension, is doing the right thing," he said. |
| Changing pension | Changing pension |
| Sir Fred had offered to cut his pension after the threat of legal action from RBS. | Sir Fred had offered to cut his pension after the threat of legal action from RBS. |
| The size of Sir Fred's pension has changed over the past few months: | The size of Sir Fred's pension has changed over the past few months: |
| • In October 2008, Sir Fred agreed to resign from RBS at the request of the board, rather than being sacked, enhancing the value of his pension pot from £10.2m to £16.6m, and giving him the equivalent of £693,000 a year | • In October 2008, Sir Fred agreed to resign from RBS at the request of the board, rather than being sacked, enhancing the value of his pension pot from £10.2m to £16.6m, and giving him the equivalent of £693,000 a year |
| • In January 2009, by working one extra month, the pension rose to £703,000 a year | • In January 2009, by working one extra month, the pension rose to £703,000 a year |
| • In early 2009 he took a lump sum of £2.7m - tax free cash he could spend straight away. As a result, his annual pension was reduced to £550,000 | • In early 2009 he took a lump sum of £2.7m - tax free cash he could spend straight away. As a result, his annual pension was reduced to £550,000 |
| • Now he has offered to return £4.7m, or £200,000 a year, leaving him with an annual pension of £342,000. His offer has been accepted by RBS and the government. | • Now he has offered to return £4.7m, or £200,000 a year, leaving him with an annual pension of £342,000. His offer has been accepted by RBS and the government. |
| 'Unprecedented attention' | 'Unprecedented attention' |
| There has been widespread public and political anger over the size of Sir Fred's pension after the bank had to be rescued by the government and reported a loss of £24.1bn in 2008 - the largest annual loss in UK corporate history. | There has been widespread public and political anger over the size of Sir Fred's pension after the bank had to be rescued by the government and reported a loss of £24.1bn in 2008 - the largest annual loss in UK corporate history. |
| FROM THE WORLD AT ONE More from The World At One | FROM THE WORLD AT ONE More from The World At One |
| "This pension arrangement became a symbolic issue, and the focus of unprecedented media and political attention," Sir Philip said in a statement. | "This pension arrangement became a symbolic issue, and the focus of unprecedented media and political attention," Sir Philip said in a statement. |
| "It had to be fixed to allow everyone to focus our energies where they should be, on getting the company back to health." | "It had to be fixed to allow everyone to focus our energies where they should be, on getting the company back to health." |
| RBS also said it had concluded a review into Sir Fred's conduct in relation to expenses and use of company assets and had found "there was no wrongdoing or other misconduct on Fred Goodwin's part in this regard that would just reducing the pension". | RBS also said it had concluded a review into Sir Fred's conduct in relation to expenses and use of company assets and had found "there was no wrongdoing or other misconduct on Fred Goodwin's part in this regard that would just reducing the pension". |
| Labour MP John Mann, who sits on the House of Commons' Treasury Committee, told the BBC Sir Fred's decision was "an important breakthrough" and hoped other bankers would follow suit. | Labour MP John Mann, who sits on the House of Commons' Treasury Committee, told the BBC Sir Fred's decision was "an important breakthrough" and hoped other bankers would follow suit. |
| Early pension | Early pension |
| There may still be criticism of the deal because it will leave Sir Fred with a bigger pension than he would have received if he had been dismissed instead of leaving on agreed terms. | There may still be criticism of the deal because it will leave Sir Fred with a bigger pension than he would have received if he had been dismissed instead of leaving on agreed terms. |
| SIR FRED'S PENSION POT October 2008: Pension pot of £16.6m = £703,000 a yearEarly 2009: Takes a tax-free lump sum of £2.7mJune 2009: Offers to give back £4.7mPot now worth about £9m = £342,500 a year href="/2/hi/business/8107501.stm">The fall out from Sir Fred's pension class="" href="http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/06/reducing_sir_fred_goodwins_pen.html">Read Robert Peston's blog | |
| Sir Fred did a deal with the bank in October 2008 that allowed him to take his full pension of £703,000 a year at the age of 50 without having to take a reduced rate for claiming it early. | Sir Fred did a deal with the bank in October 2008 that allowed him to take his full pension of £703,000 a year at the age of 50 without having to take a reduced rate for claiming it early. |
| RBS almost collapsed while Sir Fred was in charge of it as a result of a combination of the credit crunch, bad debts and the weight of the debt from RBS's acquisition of Dutch bank ABN Amro. | RBS almost collapsed while Sir Fred was in charge of it as a result of a combination of the credit crunch, bad debts and the weight of the debt from RBS's acquisition of Dutch bank ABN Amro. |
| The City minister Lord Myners has been criticised for not making sure that Sir Fred did not receive rewards for his failure. | The City minister Lord Myners has been criticised for not making sure that Sir Fred did not receive rewards for his failure. |
| The House of Commons Treasury Committee said Lord Myners should not have allowed the RBS board to conduct the negotiations by itself. | The House of Commons Treasury Committee said Lord Myners should not have allowed the RBS board to conduct the negotiations by itself. |
| 'Small gesture' | 'Small gesture' |
| Rob MacGregor from the Unite union described the offer as a "small gesture". | Rob MacGregor from the Unite union described the offer as a "small gesture". |
| "This decision to repay some of the massive pension pot he has taken will do nothing for the thousands of staff who have already lost their jobs within RBS. | "This decision to repay some of the massive pension pot he has taken will do nothing for the thousands of staff who have already lost their jobs within RBS. |
| "Also, many thousands more employees face an uncertain future, while the person whose misjudgement and greed caused their misery enjoys a life of luxury." | "Also, many thousands more employees face an uncertain future, while the person whose misjudgement and greed caused their misery enjoys a life of luxury." |
| RBS announced 9,000 job cuts in April, having made a loss of £24.1bn in 2008 - the largest loss in UK corporate history. | RBS announced 9,000 job cuts in April, having made a loss of £24.1bn in 2008 - the largest loss in UK corporate history. |
| Vince Cable, the Liberal Democrat Treasury spokesman, said: "From the point of view of public opinion, this is a very weak outcome and probably one that Sir Fred is very comfortable with." | Vince Cable, the Liberal Democrat Treasury spokesman, said: "From the point of view of public opinion, this is a very weak outcome and probably one that Sir Fred is very comfortable with." |
| However, he also said he could understand the government not pursuing the issue for "pragmatic reasons", as it would have struggled to stop the pensions because Sir Fred was not sacked. | However, he also said he could understand the government not pursuing the issue for "pragmatic reasons", as it would have struggled to stop the pensions because Sir Fred was not sacked. |