Disgraced Royal Bank of Scotland (RBS) former chief executive, Sir Fred Goodwin, has agreed to drastically reduce his controversial annual pension benefit.

Goodwin will now receive a yearly payment of £342,500 rather than £555,000 which the bank claims represents a reduction of the total value of his pension by £4.7 million.

He will keep his £2.7 million tax-free lump sum.

Philip Hampton, the chairman of RBS, who headed an inquiry into the pension, commented: "On any measure this represents a very substantial reduction to Fred's pension and is an acceptable amount to all parties to the discussion. I am very pleased that we have resolved a situation that has been a difficult and unhappy one for all the partied involved, and it is to Fred's credit that he has done this on a voluntary basis.

"This pension arrangement became a symbolic issue, and the focus of unprecedented media and political attention. It had to be fixed to allow everyone to focus our energies where they should be, on getting the company back to health."

Faith Dickson, partner at law firm Sacker & Partners LLP, said that the case did not represent a threat to other future retirees' pensions: "It looks at the moment like this is a re-negotiation of the deal done when Sir Fred left RBS - rather than anyone finding a clever way out of paying the pension that had already been put into payment. If this is correct, then it appears to leave in place the legal protections that exist to stop employers trying to take pensions off retired employees, while going some way to recognising that compensation packages should recognise the circumstances in which the person is leaving."

- Pensions Age June 2009

Share Story: