RBS tackles pension problem

25th Aug 2009 13:14

State-owned lender Royal Bank of Scotland has decided to cut the level of benefits received by members of its generous final salary pension scheme.RBS, which last year handed controversial ex-boss Sir Fred Goodwin a £17m retirement deal, will cap increases in pensionable pay to 2% a year, or the rate of inflation, whichever is lower.Trade union Unite called the move a 'body blow' to the bank's 60,000 staff, but RBS, 70%-owned by the government, said it was 'pragmatic and necessary'.Staff nearing retirement and with promotions largely achieved will not notice a big impact, but younger employees expecting to work their way up will be hit hard.It's thought the move will save the bank £500m in addition to annual savings of £100m. Sir Fred, who left the company earlier this year, initially enjoyed a pension of £703,000 a year, although he later agreed to take a more modest £342,500 following public outcry.