Former RBS chief pension under scrutiny

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Former Royal Bank of Scotland (RBS) chief Sir Fred Goodwina��s pension package is being criticised by the organisation which was set up to oversee taxpayera��s interest in UK banks.

John Kingman of the UK Financial Investments (UKFI) said Sir Fred could have been paid off for much less than the A?630,000 annual pension that he was been awarded.

Acting chairman of the UKFI, Glen Moreno, and Mr Kingman were being questioned by the Treasury Select Committee and said that the board of RBS could have terminated Sir Fred’s contract without giving him notice.

Sir Fred was awarded a pension worth a total of A?16 million but it has been highly criticised since he and former ex-chairman of RBS, Sir Tom McKillop, both confessed that the purchase of Dutch bank, ABN Amro, was a a�?big mistakea�? and have been blamed for the near collapse of the bank.

According to Mr Kingman, the Government was aware of the size of the pension pot, but added that “what the government was not told was that this payment was in any way discretionary”. The UKFI believes that the criticism should be aimed at the board of RBS.

While Moreno told the Treasury he regarded Sir Fred’s pension as “reward for failure”, he has stressed that there was nothing the UKFI could have done to prevent the payout. Glen Moreno was appointed acting chairman of the organisation when Sir Philip Hampton left to take over as chairman of RBS.

In the meantime, Prime Minister Gordon Brown said he will be exploring “every possible legal avenue” to reduce Sir Freda��s pension deal.

There have been requests to Sir Fred to surrender his pension but the 50-year-old (dubbed Fred the Shred for his approach to banking), said the Treasury had approved the pension deal when he agreed to step down last autumn and is therefore refusing to surrender a penny of his pension.

Last week, RBS, which is 68% owned by the taxpayer, reported a full 2008 year loss of A?24.1 billion – the largest annual loss in UK corporate history.

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