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Goodwin offers to reduce pension Goodwin's pension to be reduced
(10 minutes later)
Former Royal Bank of Scotland chief executive Sir Fred Goodwin has offered to reduce his highly controversial pension by £200,000 a year.Former Royal Bank of Scotland chief executive Sir Fred Goodwin has offered to reduce his highly controversial pension by £200,000 a year.
It would cut the value of his pension pot by about £4m. He has taken a lump sum of £2.7m, but the deal would still leave him with £350,000 a year. He has already reduced his £703,000 pension by taking out £2.7m from his pension fund. If his offer is accepted he will receive £350,000 a year.
The offer to cut his pension came under a threat of legal action from RBS. The offer to cut his pension came after a threat of legal action from RBS.
BBC business editor Robert Peston says the bank is likely to accept Sir Fred Goodwin's offer. BBC business editor Robert Peston says the bank and the government are likely to accept Sir Fred Goodwin's offer.
The question is whether the government, which owns 70% of RBS as a result of a £20bn bail-out, will accept it. The government has a say in the decision because it owns 70% of RBS as a result of a £20bn bail-out.
Early pensionEarly pension
Ministers may oppose the deal because it would still 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.
The Treasury declined to comment on the offer.
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 he should not have allowed the RBS board to conduct the negotiations by itself.The House of Commons Treasury Committee said he should not have allowed the RBS board to conduct the negotiations by itself.