Your report on the Royal Bank of Scotland shareholders’ lawsuit (your report, 29 March) repeats the common error that Fred Goodwin’s annual pension at age 50 was reduced from £703,000 to £342,500. As taxpayers are effectively paying for it (and other for mer directors, such as Gordon Pell) they deserve to know the truth.
Goodwin received £2.7 million of his pension “pot” as a tax-free lump sum in February 2009, as permitted by RBS and HM Revenue and Customs, and accepted by the then government, as it had omitted to apply normal bankruptcy rules to RBS executive pensions when imposing its bail-out terms in October 2008. Accordingly, his annual pension entitlement fell to £555,000 which he then agreed, under pressure and with bad grace, to reduce by £212,500 to £342,500. So, the true reduction was 30 per cent of £703,000 (£212,500) not 51 per cent as usually reported.
Had his “early retirement” been treated as “dismissal”, his pension would have been £416,000 from age 60, or significantly below both the original and actual payments. Had we taxpayers not prevented RBS’s bankruptcy, it would have been limited to £28,000 from age 65, under the Pension Protection Fund rules that apply to the rest of us.
St. Andrews, Fife