Goodwin refuses to give up £16 million pension pot

27 February 2009

The government continues to put pressure on Sir Fred Goodwin, the former boss of flopped bank Royal Bank of Scotland, to surrender his £16.6 million pension pot.

The news that the 50-year-old is to receive nearly £700,000 a year from his pension fund has caused outrage, with media commentators dubbing him “Fred the Shred”.

The Treasury has stepped in, calling the situation "unfortunate and unacceptable". The furore over Goodwin's pension comes after RBS announced the biggest UK annual corporate loss in history, totalling £24.1 billion.

Alongside its results, RBS also confirmed that it is to take part in the government’s second bail-out plan, with £325 billion of its assets ‘insured’ under the Treasury’s Asset Protection Scheme. Its participation means the Treasury – and thus the taxpayer – has a stake of nearly 90% in the banking group.

Despite the massive bail-out, disgraced former chieftain, Goodwin, is refusing to hand back any of his £16 million pension pot, claiming ministers had known about it for months and Treasury minister Lord Myners had approved it.

Goodwin has also released correspondence between himself and Myners, discussing his departure from RBS last October.

It reads: “My pension was raised with you by the chairman of the [group remuneration] committee and you indicated that you were aware of my entitlement and that no further ‘gestures’ would be required.”

By gestures, Goodwin is referring to the fact he relinquished his 12-month notice period and waived certain share related awards.

However, taxpayers are growing increasingly angry that the man who oversaw one of Britain’s biggest banks as it fell to its knees should be so generously rewarded in retirement.

The government is also insisting that it was under the impression that Goodwin's pension contract was legally binding and Lord Myners denies approving it. Chancellor Alistair Darling says the government is now looking into ways to claw back some of the cash amid mounting public anger.

The revelation, which threatens to undermine government claims that it will not reward failure, is now being investigated by the body that manages the government's shareholding, UKFI.

Treasury minister Stephen Timms said it was working with RBS to see what scope there may be for clawing back some of this payment.

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