Sir Fred Goodwin is refusing to hand back any of his £693,000-a-year pension despite calls from government ministers for him to do so, and claims that ministers were aware of the arrangements some months ago.
Goodwin left Royal Bank of Scotland Group (RBS) as chief executive last October, soon after it was bailed out by the government with £20billion of tax-payers' money. It has since reported a loss of £24.1bn, a record in UK corporate history. The terms of Goodwin's departure meant his pension pot was doubled from £8million when he agreed to take early retirement last October.
The 50-year-old has said that the government was aware of his pension arrangements when he left the bank and that his £16million pension was approved by Treasury Minister Lord Myners. Myners telephoned Goodwin on 25 February to urge him to forgo a portion of it in light of the bank's financial position.
Goodwin said in a letter to Lord Myners, which was released to the media, that he would be declining the option to voluntarily take a reduction in his entitlement, worth around £13,000 a week. The letter said: "I believe that to voluntarily accept a reduction in pension which has been built up over many years and in other employments in addition to RBS, is not warranted."
In a reply to Goodwin, Myners has denied approving his pension arrangement, saying he only became aware of the amount last week. "As I made clear in our phone call, I think such an act would be an appropriate recognition of the failings of RBS under your tenure and the subsequent support the government has provided," he said.
Speaking on the BBC's Newsnight programme, Myner's ministerial colleague Stephen Timms said Myners was informed that Goodwin had a contractual entitlement to the payout, when part of the pension pot was actually discretionary.
For more information, see yesterday's story at https://www.employeebenefits.co.uk/item/8517/23/5/3