Friday, 27 February 2009

Sir Fred and his pension

I suppose that the biggest story this week regarding an individual and the ongoing banking crisis is the business of the disgraced former boss of The Royal Bank of Scotland, Sir Fred Goodwin, and his bumper pension. The first comment I am going to make is that we are told that the £650,000 a year he will get for the rest of his life - and he is only 50 years old at the moment - is not just for the ten years he has been with RBS. One would love to know just how much of his pension pot has accrued since he took the helm at the bank. I suppose we will never find out but it might put a different perspective on the subject.

The next thing to say is that although £650,000 is colossal to both me and the man on the Clapham Omnibus it of course is fairly insignificant compared with the mind boggling sums put into the banks to prop them up. No it's the reward for failure that goes against our perception of justice I guess. The history of how Sir Fred managed to retain such a pension is starting to become clearer: evidently it was the old board at RBS that agreed the terms of the pension but what unbelievably the government have only just realised is the fact that there was a discretionary element in the agreement This is what the BBC's business editor Robert Peston says on his blog:

The rules of its pension fund are that it was "allowed" to pay an early enhanced pension to a member who "retires early at the request of the company".

But it was not obliged to do so.

Also, and very relevantly, if the company had dismissed Sir Fred, rather than asking him to retire, then again he wouldn't have been eligible for these generous benefits.

Mr Peston then goes on to muse about how much the government knew of the arrangements. They were told we understand that the pension payout was legal and binding; my take on it is that they (again) weren't diligent enough. It's all very well Gordon Brown being outraged at Sir Fred taking this pension and that the government will use every means possible to try and stop it but once more the wretched horse has bolted before the stable door was closed.

One thing that ought to be done a.s.a.p is to strip Sir Fred of his knighthood if that was bestowed on him for his services (ha ha) to banking. That would really deflate his ego. But of course that wouldn't happen under Brown's watch because it would have been he who had suggested the knighthood I would imagine and he wouldn't be keen on the public being reminded about that!

I heard John Prescott on the Today programme this morning laying into the bankers. He bludgeoned away in the usual Prescott manner and was clearly trying to say that what's been happening is nothing to do with the government. But what gets me with him is his sheer hypocrisy - he'll have a go at bankers reward for failure, but has a conveniently short memory regarding how he was rewarded even after he screwed things up. I don't know whether Prescott still has his grace-and-favour homes that Tony Blair allowed him to retain after Prescott lost his departmental responsibilities and then of course there is the not inconsiderable pension pot that Prescott will get courtesy of the tax payer. But then I expect that Mr Prescott reckons that he is well worth it.

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