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Goodwin's pension hits £703,000 Goodwin's pension hits £703,000
(about 6 hours later)
Sir Fred Goodwin's pension from the bank RBS is in fact £703,000 a year, not the £693,000 previously stated.Sir Fred Goodwin's pension from the bank RBS is in fact £703,000 a year, not the £693,000 previously stated.
The figure has been revealed as the bank explains why it asked its disgraced former chief executive to retire last year.The figure has been revealed as the bank explains why it asked its disgraced former chief executive to retire last year.
The bank says it asked Sir Fred to retire, rather than sack him, to ensure an orderly handover to his successor.The bank says it asked Sir Fred to retire, rather than sack him, to ensure an orderly handover to his successor.
Sir Fred left last October when the bank, in danger of collapsing, was being rescued by the UK government.Sir Fred left last October when the bank, in danger of collapsing, was being rescued by the UK government.
RBS acknowledges that if he had been dismissed, his pension would now be £416,000 a year, not £703,000.RBS acknowledges that if he had been dismissed, his pension would now be £416,000 a year, not £703,000.
RBS letterRBS letter
The figures are revealed in a letter to John McFall MP, chairman of the Treasury Select Committee, from Miller McLean, general counsel and secretary to the RBS group.The figures are revealed in a letter to John McFall MP, chairman of the Treasury Select Committee, from Miller McLean, general counsel and secretary to the RBS group.
Sir Fred Goodwin's pension arrangements followed as an automatic consequence of him being asked to leave at the request of the company RBS letter Can they catch Sir Fred's pension?Sir Fred Goodwin's pension arrangements followed as an automatic consequence of him being asked to leave at the request of the company RBS letter Can they catch Sir Fred's pension?
The letter says that on Friday 10 October 2008, the bank's non-executive directors agreed that Sir Fred should leave the bank "and that it was in the company's interest for there to be an orderly handover to his successor".The letter says that on Friday 10 October 2008, the bank's non-executive directors agreed that Sir Fred should leave the bank "and that it was in the company's interest for there to be an orderly handover to his successor".
"Sir Fred Goodwin agreed to stay in post until his successor was appointed and available," the letter says."Sir Fred Goodwin agreed to stay in post until his successor was appointed and available," the letter says.
"During the course of 10 October 2008 they [Sir Tom McKillop and Bob Scott] decided this would best be accomplished through treating Sir Fred Goodwin as leaving at the request of the company in accordance with the principles applied to other directors leaving the group and not being dismissed," the letter adds."During the course of 10 October 2008 they [Sir Tom McKillop and Bob Scott] decided this would best be accomplished through treating Sir Fred Goodwin as leaving at the request of the company in accordance with the principles applied to other directors leaving the group and not being dismissed," the letter adds.
The rules of the RBS pension scheme are outlined in the bank's annual report for 2007.The rules of the RBS pension scheme are outlined in the bank's annual report for 2007.
They mean that the pension Sir Fred had earned to date would be payable at age 50, rather than age 60, without any reduction for early retirement.They mean that the pension Sir Fred had earned to date would be payable at age 50, rather than age 60, without any reduction for early retirement.
And that in turn meant his pension pot would have to be topped up, from £8.4m to £16.9m, to finance the early payment of ten year's worth of pension.And that in turn meant his pension pot would have to be topped up, from £8.4m to £16.9m, to finance the early payment of ten year's worth of pension.
HearingsHearings
Earlier, the company set up to manage the government's holdings in banks criticised the way that RBS agreed Sir Fred Goodwin's pension.Earlier, the company set up to manage the government's holdings in banks criticised the way that RBS agreed Sir Fred Goodwin's pension.
WHO IS JOHN KINGMAN? Former high-profile civil servant, aged 39Was Tory minister Stephen Dorrell's private secretary from 1993 to 1995 Wrote Lex column on Financial Times from 1995 to 1997Worked for BP chief executive Lord Browne before returning to civil service as Gordon Brown's press secretary (1999 to 2000)As second permanent secretary in the Treasury, he co-ordinated the government's bail-out of Northern Rock bankBecame chief executive of newly-created UK Financial Investments in November 2008Described by those who know him as "self-effacing but self-confident" MPs question UKFI bosses
UK Financial Investments (UKFI) blamed the RBS board for deciding to give its former boss an enlarged pension, which UKFI described as "discretionary".UK Financial Investments (UKFI) blamed the RBS board for deciding to give its former boss an enlarged pension, which UKFI described as "discretionary".
The letter from RBS rejects this suggestion.The letter from RBS rejects this suggestion.
"Sir Fred Goodwin's pension arrangements (and other payments and benefits) followed as an automatic consequence of him being asked to leave at the request of the company," the letter points out."Sir Fred Goodwin's pension arrangements (and other payments and benefits) followed as an automatic consequence of him being asked to leave at the request of the company," the letter points out.
UKFI chief executive John Kingman and acting chairman Glen Moreno were being questioned by the Treasury Committee.UKFI chief executive John Kingman and acting chairman Glen Moreno were being questioned by the Treasury Committee.
Mr Moreno said he regarded Sir Fred's pension as "reward for failure".Mr Moreno said he regarded Sir Fred's pension as "reward for failure".
He said: "I think it was wrong. I don't think the remuneration committee or the board of RBS should have effectively increased, doubled I guess, a pension benefit in that situation."He said: "I think it was wrong. I don't think the remuneration committee or the board of RBS should have effectively increased, doubled I guess, a pension benefit in that situation."
In the dark?In the dark?
Mr Moreno criticised Sir Fred's behaviour at RBS. "If I were [Sir] Fred, I would have walked," he told MPs.Mr Moreno criticised Sir Fred's behaviour at RBS. "If I were [Sir] Fred, I would have walked," he told MPs.
Mr Kingman said that the government had been aware of the size of the pension pot, but accused the RBS board of not sharing material facts with Financial Services Secretary Lord Myners.Mr Kingman said that the government had been aware of the size of the pension pot, but accused the RBS board of not sharing material facts with Financial Services Secretary Lord Myners.
He said: "I don't think one can expect Lord Myners to know the finer details of the RBS pension scheme."He said: "I don't think one can expect Lord Myners to know the finer details of the RBS pension scheme."
The letter from RBS to Mr McFall reveals that City minister Lord Myners was told on 12 October that the value of Sir Fred's pension would be in a range between £15m and £20m.The letter from RBS to Mr McFall reveals that City minister Lord Myners was told on 12 October that the value of Sir Fred's pension would be in a range between £15m and £20m.
"These pension terms were a consequence of the basis upon which it had been agreed that Sir Fred would be leaving the company, although we believe that no alternative basis for departure was discussed with Lord Myners," the letter says."These pension terms were a consequence of the basis upon which it had been agreed that Sir Fred would be leaving the company, although we believe that no alternative basis for departure was discussed with Lord Myners," the letter says.