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| Version 0 | Version 1 |
|---|---|
| RBS to scale back pension benefit | RBS to scale back pension benefit |
| (20 minutes later) | |
| High Street bank RBS is to scale back on the benefits to staff in its final salary pension scheme. | |
| The bank said that it would cap any future increases in pensionable pay to 2% a year, or the rate of inflation, whichever was lower. | |
| This means that even if workers get a larger pay increase or promotion, only a maximum 2% rise would be used when calculating their eventual pension. | |
| The bank was criticised early in 2009 for the pension of its former boss. | The bank was criticised early in 2009 for the pension of its former boss. |
| Sir Fred Goodwin initially took a pension of £703,000 when he left the bank, although he has since agreed to lower his pension income to £342,500 a year. | Sir Fred Goodwin initially took a pension of £703,000 when he left the bank, although he has since agreed to lower his pension income to £342,500 a year. |
| 'Pragmatic' | 'Pragmatic' |
| RBS closed its final salary scheme to new members in 2006, and like many other businesses has been looking at its provision for existing members. | RBS closed its final salary scheme to new members in 2006, and like many other businesses has been looking at its provision for existing members. |
| RBS almost collapsed under Sir Fred Goodwin's leadership | |
| The bank said the move was "pragmatic and necessary" but the decision was condemned by the trade union Unite which said that it was a "body blow" to its 60,000 staff. | The bank said the move was "pragmatic and necessary" but the decision was condemned by the trade union Unite which said that it was a "body blow" to its 60,000 staff. |
| It is less drastic a move than the intention of another High Street bank - Barclays, which is planning to shut its final salary scheme for existing members. | It is less drastic a move than the intention of another High Street bank - Barclays, which is planning to shut its final salary scheme for existing members. |
| Final-salary schemes have traditionally been seen as the best type of pension a worker can get. They promise to pay a retirement income based on a percentage of your salary every year for the rest of your life. | Final-salary schemes have traditionally been seen as the best type of pension a worker can get. They promise to pay a retirement income based on a percentage of your salary every year for the rest of your life. |
| The amount you get depends on how long you have spent working for your employer and how much you were earning at the time you left the business - your final salary. | The amount you get depends on how long you have spent working for your employer and how much you were earning at the time you left the business - your final salary. |
| Early retirement | |
| The bank, which is 70%-owned by the taxpayer, said that it was also reducing the lump sum payable on early retirement for those members opting to take an immediate undiscounted pension. | |
| It said that a third of its staff were members of the final salary scheme, also known as defined benefit. | |
| "This is an expensive scheme for our shareholders to fund and a generous one in comparison to the market," said Neil Roden, head of human resources at RBS. | |
| "The reforms we are consulting on seek to strike a balance between reducing the costs and future liabilities of the scheme to the group, with doing what we can to protect the welfare of existing staff and scheme members. | |
| "It is a pragmatic and necessary course of action and not a decision the board have taken lightly." | |
| But the banking trade union, Unite, said that the move would add "insult to injury" to workers following the controversy over the Fred Goodwin pension affair. | |
| "Unite will support its members in any action they choose to take to defend their pensions. The union will be meeting again with RBS and we expect there to be meaningful negotiations over these changes," said Rob MacGregor, Unite national officer. | |
| "RBS staff, who already face great uncertainty in the face of major job losses, now face a future with retirement benefits severely reduced." | |
| Research published in June by pension advisors MGM Advantage said that employers in the UK had saved themselves £4.5bn a year through lower contributions as a result of closing final salary pension schemes. |