Jeremy Warner: Myners cited in Goodwin row


Outlook The row over Sir Fred Goodwin's pension is proving as much an embarrassment for the Government as it is for Sir Fred. "I know", some bright spark at the Treasury must have thought. "Let's completely overshadow one of the most important and high-risk policy initiatives of the modern age by leaking a bit more banker-bashing to the BBC". Fred's pension must have seemed just the ticket, demonstrating beyond dispute what greed-fuelled rogues all those bankers really were. If that was the idea, the plan has certainly succeeded, though probably not in quite the way intended.

RBS had claimed Sir Fred wasn't getting a pay-off. In fact, in accordance with the terms of his contract he was getting a massive pensions top-up, entitling him to an annual income of £693,000 for the rest of his life. It does indeed seem scandalous. Without the support of the taxpayer, RBS would be bust, with Sir Fred's pension in the hands of the Pension Protection Fund, where his maximum entitlement would be £20,000 a year on reaching the age of 65. At the moment, he's only 50.

Scandalous indeed. So scandalous, in fact, that a Government minister seems actually to have agreed it. If Lord Myners, the Financial Services Secretary to the Treasury, had assumed Sir Fred too depressed by his fall from grace to fight back, he assumed wrong. Last night, the text of a letter was released in which Sir Fred refuses to moderate his pension entitlement and accuses Lord Myners of sanctioning the terms when they were agreed last October.

At the time, Lord Myners had thought Sir Fred's agreement to give up his entitlement to a pay-off and various share awards sufficient a "gesture" to compensate for the support the Government was giving. He is said to have been fully aware of the pensions arrangements agreed by the board, which had supposedly been communicated to him. Sir Fred implies he wouldn't have given up his other rights had he realised the Government would turn around at a later stage and ask for some of the pension back too.

The episode demonstrates what an extraordinary bubble, divorced from the realities of ordinary life, all these people live in. Lord Myners, a wealthy former financier imported into the Government because he was meant to know about the City, seems to be as bad as the rest of them. For Sir Fred to hit the pensions jackpot required his chairman, a fellow Scot called Sir Tom McKillop, to ask him to take early retirement. Under the terms of a deal spelt out in the annual report, this allowed Sir Fred to retire immediately on the sort of pension entitlement he would otherwise not have qualified for until aged 60.

That either Sir Tom or Lord Myners could have thought this remotely acceptable given what was happening to the bank is breathtaking. Terms of this sort are not meant for high-earning, failed chief executives fired in their late 40s, but for ageing Captain Mainwaring-type branch managers as a way of easing them out the door early in as humane a way as possible.

Assuming Sir Fred's version of events is correct, it is probably best explained by political naivity on Lord Myners' part. He's not a politician by background and he lives in the sort of world where a million here, a million there is of little consequence. At the time, it may have seemed sufficient to him simply to have deprived Sir Fred of a pay-off.

Yet what are these pension arrangements other than a pay-off by another name? Sir Fred's pension pot is reported in the last published accounts as a little over £8m. RBS said yesterday the notional transfer value after the early retirement deal had risen to more than £16m.

Yet even this seems hugely to underestimate the costs of providing a pension of this size to a man who can reasonably expect to live at least another 35 years. It's all too grubby for words, and now the Government finds itself in the thick of it.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea