Myners faces pensions questions

When Sir Fred stepped down the chancellor said he had waived his contractual entitlements

City Minister Lord Myners should explain why he did not ask "necessary questions" about ex-RBS chief Sir Fred Goodwin's pension deal, say the Tories.

Shadow chancellor George Osborne said Lord Myners had been told the pension would be a "substantial figure".

MPs have been told that if Sir Fred had been fired, instead of being asked to retire, his �703,000-a-year pension could have been nearly halved.

Lord Myners said he had not known the pension deal was negotiable.

'No alternative'

In a letter to the Commons Treasury committee, RBS Group Secretary Miller McLean revealed that Sir Fred's pension deal was worth �703,000 a year - higher than the previously quoted figure of �693,000 - to the 50-year-old.

He said that the decision to treat Sir Fred "as leaving at the request of the company" rather than dismissing him, had been made by RBS chairman Sir Tom McKillop and senior independent director Bob Scott on 10 October 2008.

I think Lord Myners was simply told that Fred was going and I think the clear impression he had was that Sir Fred was going with his minimum entitlement John Kingham UKFI chief executive Business editor Robert Peston's blog Myners defends RBS pension stance

He added that there had been "no discussion of any alternative basis of departure" by the RBS non-executive directors.

And the pension terms had been "summarised" by Mr Scott in a telephone call to Lord Myners on 12 October, who was informed the pension fund "would be a substantial figure".

He also confirmed, had Sir Fred been dismissed, he would have received a deferred pension - payable from the age of 60 - worth about �416,000 a year.

For the Conservatives shadow chancellor George Osborne said: "Why weren't the necessary questions being asked by Lord Myners before he signed off such a large pension? RBS themselves say that they mentioned that it would be a 'substantial figure'."

'Extraordinary' decision

Earlier, MPs on the Treasury Select Committee grilled John Kingham and Glen Moreno - chief executive and chairman of UKFI - the body which manages the taxpayers' stake in the now part-nationalised bank.

Mr Kingham said the decision to ask Sir Fred to retire roughly doubled the size of his pension pot and was "extraordinary and remains unexplained".

The Treasury select committee was told the troubled bank could have terminated his contract and he would not have had the right to an "undiscounted pension".

Instead Sir Fred would have left with one year's salary as a pay-off - likely to have been a seven-figure lump sum.

"Plainly the cost of that would have been a great deal less than the pension outcome that we now know followed from their decision," Mr Kingham told MPs.

"The terms on which he left could have been different and that fact was not, so far as we can establish, shared with anyone in government until the 19th of February."

Mr Moreno told MPs there was a tendency for company boards to take legal advice on firing directors - which was usually that nothing could be done.

But he said "if someone destroys the level of a long standing institution on that scale" through "inadequate management" the board should tell them to stand down and deal with any legal battle afterwards.

City Minister Lord Myners denied "endorsing" Sir Fred's pension during negotiations which saw him effectively ousted as RBS chief executive last October.

"I was assured that the pension arrangement for Sir Fred Goodwin reflected 30 years of service, and no mention was made to me of discretion in that respect," he told peers on Monday.

Sir Fred agreed to take early retirement as the government prepared to pump �20bn into the troubled bank.

MPs were told that Lord Myners had spelled out to the RBS board - that there should be no "rewards for failure" and any payouts to Sir Fred should be minimised.

E-mail this to a friend

Printable version