Fred Goodwin agrees to pension cut

Jun 18, 2009
Jack Bremer

The disgraced banker has accepted a cut of more than £200,000 a year in return for immunity

The former Royal Bank of Scotland chief executive Sir Fred Goodwin has agreed to a cut in his controversial pension, which he was allowed to take at age 50 instead of 60 and was estimated to be worth a total of £700,000 a year. It is understood that he will retain the £2.7m portion he was allowed to take in cash, but has agreed to a cut in the annual payment of £550,000 to £342,000 a year.

The news follows the discovery at the weekend by News of the World reporters that Goodwin is now living in France with his wife and two children renting a 'hideaway' in the hills behind the Cote d'Azur. The newspaper did not give the exact location of the house, but showed an aerial shot of a large property with pool and tennis court, believed to be close to Cannes.

Since his departure from RBS last October, and its rescue by the state, the bank has announced 9,000 job cuts in its attempts to recover from last year's loss of £24.1bn - the biggest in British corporate history.

Goodwin has been under pressure to hand back some if not all of the pension ever since it was discovered that he was due to receive the gargantuan reward, paid for by taxpayers, despite his obvious incompetence in running the bank. But he has refused to do so, despite the anger of shareholders - one of them called him "Britain's biggest benefit scrounger" at April's annual meeting - and an attack by vandals on his home in Edinburgh.

This followed the urgings of some newspaper columnists, including Max Hastings who told readers of the Daily Mail to "get the boot in and keep kicking... This is why we must stand outside their homes throwing rocks through the window".

Goodwin's pension cut has been negotiated by the bank's new chairman, Sir Philip Hampton, in return for a promise not to prosecute him. It follows a pledge by Goodwin's successor as chief executive, Stephen Hester, to leave "no stone unturned" in his efforts to recover at least some of the pension money.  

There are still moves afoot to force Goodwin to return his knighthood. It was awarded in 2004 for "services to banking".

Andrew Pierce
, Daily Telegraph: "It's not about legality. It's about honour and decency. If Sir Fred had a shred of either ­ if you'll pardon the pun ­ he would give back every penny. He would also surrender the knighthood he received from Tony Blair, that other paragon of virtue, which came with a citation for services to banking."

Andrew Hill, Lombard column in the FT: "RBS has done enough to ensure that its Fred file is now closed. But in his quest for rehabilitation, Sir Fred himself has done too little, too late."

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