IT IS not the case that Fred Goodwin’s pension “entitlement” of £703,000pa was “later reduced to £350,000” as your extract from Iain Martin’s book states (your report, 12 September).
Under Royal Bank of Scotland rules, Goodwin took an “advance pension” as a tax-free lump-sum of £2.7 million, which reduced the £703,000 to £542,000 pa. After much pressure, he agreed to waive £200,000, leaving £342,000 as his initial annual pension, inflation-proofed. Therefore, his effective pension from age 51 is £503,000pa.
Your report also states the RBS board decided to treat him “in the normal way”, ie “as a good leaver”, which doubled his pension pot from its initial report of £8m to £16m. So, did all other good leavers down the RBS hierarchy have their pensions doubled? Moreover, independent actuaries said that £703,000 pa, at age 51, with spouse’s pension, index-linked, would have required a pot of more than £30m in the annuities market.
Finally, in their evidence on 10 February, 2009, Goodwin and RBS chairman Sir Tom McKillop allowed the Treasury select committee to believe that his pot was £8m; no mention was made of its doubling nor of its true actuarial value. As Iain Martin says: “Incredibly, almost everything that caused the financial crisis was entirely legal.” Maybe so, but there remain issues of morality, greed and incompetence, which hardly square with the mottos and ethics of the professional institutes whose memberships still include several former directors of RBS.
St Andrews, Fife