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Sir Fred 'will not give up pension'.

Summary: Former Royal Bank of Scotland boss Sir Fred Goodwin has written to the Treasury indicating he will not voluntarily give up his pension.

Former Royal Bank of Scotland boss Sir Fred Goodwin has written to the Treasury indicating he will not voluntarily give up his pension.

Sir Fred is coming under increasing pressure to give up at least part of the pension, worth an estimated Au693,000 a year, which he is already receiving at the age of 50 under an early retirement deal agreed with the RBS board when he was forced out last October.

Prime Minister Gordon Brown said the Government was looking at legal action to claw back the money, insisting that there should be "no reward for failure".

RBS earlier announced a whopping Au24.1 billion pre-tax loss for 2008 - during which time Sir Fred was overseeing the bank.

But Sir Fred has written to City minister Lord Myners to say that he is not ready to waive his entitlement.

He said: "I am told the topic of my pension was specifically raised with you by both the Chairman of the Group renumeration committee, and the Group Chairman, and you indicated that you were aware of my entitlement and that no further 'gestures' were required."

Mr Brown said he is "determined" action should be taken in the case of Sir Fred - who is known as "Fred the Shred" for his ruthless cost-cutting. He and chairman Sir Tom McKillop lost their jobs last year when the taxpayer had to bail out the bank.

Speaking at an event in Suffolk, Mr Brown said: "I am determined that we pursue, if necessary by legal action, cases where too much money has been taken out in cases where there is less justification that has been claimed for remuneration."

He added: "Failure should not be rewarded. Practices are coming to light which have got to be dealt with. I became aware of this deal only a few days ago and I immediately demanded action on it.

"There has been no financial gain. It's been made absolutely clear that I was not properly informed. Where there is an inadvertent breach, you'll apologise for it and that is what I've done."

Shadow chancellor George Osborne called on the Government to reveal how much it knew about the deal, saying: "There is of course now only one person who can correct this huge error of judgement by the Chancellor, and that is Sir Fred Goodwin himself, who should in all decency renounce his pension."

He described the pension as a "totally irresponsible use of taxpayer's money" and said there appeared to be differing accounts on how much the Government knew about it.

Earlier, Mr Darling told the Commons that further action to prop up RBS, including taxpayer-backed insurance for Au325 billion of "toxic" assets, is vital to prevent the recession being "longer and more painful and putting more jobs at risk".

RBS Chief Executive Stephen Hester also announced plans to cut Au2.5 billion in costs across the business by 2011 as he attempts to restore the ailing group to health. This will "regrettably" involve further job losses, he added.

The bank is planning to make a "non-core" division of assets worth around Au540 billion which it plans to wind down or dispose of over the next three to five years.

Most of the divisions and assets to be sold will be from RBS's investment banking division, and the bank will end or drastically reduce its presence in 36 of the 54 countries in which it operates.

Mr Hester said the "primary task" for RBS would be to rebuild its stand-alone strength so the Government could sell down its shareholding in the coming years.

But he warned: "To make any forecast is hazardous, beyond the expectation that 2009 will be a very tough year for the world economy."

Independent Television News Limited 2009. All rights reserved.

Independent Television News Limited 2009. All rights reserved.

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Publication:Independent Television News Limited (ITN)
Date:Feb 26, 2009
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