I'm all right, said Fred

Does anybody look good in the Fred Goodwin pension farrago? The man himself looks unfathomably greedy, and has certainly managed to cast fresh doubt (as if any were needed) on the sincerity of his "apology" to the Treasury Select Committee a couple of weeks ago. The Government looks both incompetent (for apparently not paying enough attention to this matter when it was showing Sir Fred the door a few months ago) and duplicitous (for trying to renege on what appears to be a valid contract). Dear old Robert Peston looks smarmy and mean -- when are we going to get the details about your pay and pension, Bobby baby? After all, you work for a company that's entirely dependent on taxpayer funds too.

The letter Sir Fred sent to Lord Myners on Thursday is so carefully worded that you have to wonder where the truth lies. Sir Fred (or rather his brief) is adamant that the pension is in line with RBS's normal practices, and it seems to have been given the nod by Lord Myners on that basis. However, it's not at all clear that the Government understood that those "normal practices" allowed RBS to give Sir Fred his full pension at age 50 instead of 60. This has the effect of doubling the value of the notional "pension pot" from which it's taken. If the Government can prove it didn't know that the RBS board would do this, its moral and maybe even its legal case against Sir Fred would be strengthened enormously. Otherwise, it would be a very disturbing precedent if the Government tried to find a way not to pay the agreed money to Sir Fred, as Prezza is demanding they should and Gordon Brown is hinting they will.

By the way, Sir Fred has helped to prove a point that I made in my recent posting about RBS's bonus scheme. ("RBS: Ridiculous Bonus Substitute"). Sir Fred has willingly "sacrificed" his contractual one year's salary-in-lieu and share options, worth a grand total of not much more than £1 million, for an £8 million boost to his pension pot. Well, you would, wouldn't you? Even further by the way, reports suggest that a lot of City bankers are asking for 10% base salary increases in lieu of bonuses, so it looks as if RBS's absurd deal for all of its staff is going to set a precedent.

I can't help noticing that all the politicians who are calling for Sir Fred to commit seppuku are entitled to very generous pensions of their own -- not as big as Sir Fred's, but fully indexed at taxpayers' expense. And most of the people who think it's fine to wash Sir Fred's financial linen in public are fantastically secretive when it comes to their own expense claims. Even so, I think Sir Fred is going to have to give something back, whether he likes it or not.