If only the rich could become richer. The recent explosion in bankers pay has obviously not been enough to RBS is set to create a Third World-like system of haves and have nots. During a recession it's much easier to get away with this because people are happy to have employment but creating such vast differences where the traders continue to make superstar cash (regardless of overall performance) and the rest of the team sees cuts is not sensible.
RBS's announcement that it is capping its final salary pension scheme sparked a furious response from the trade union Unite, which said the move added "insult to injury" in the wake of the bumper pension package paid out to Sir Fred Goodwin, the bank's disgraced former chief executive.Wow, a whole £1 million per year. For the rest of us yes, it's a lot but this is a few years of retirement payouts to shamed CEO Fred "the Shred" Goodwin. It's also less than they are paying quite a few traders, as in the same traders who trashed the bank.
The plan involves capping future increases in pensionable salary at 2 per cent or the rate of inflation, whichever is lower. Employees also have the option to switch to a defined contribution scheme, which will see RBS pay 15 per cent of annual salary.
The move is expected to save £1m in annual costs and cut future liabilities by £500m. The deficit of the scheme currently stands at £800m. Neil Roden, the head of human resources at RBS, said: "The rising cost of pension provision is an issue for RBS and for all companies at this time."
A third of the group's employees – about 60,000 – will be affected by the change to the scheme, which was closed to new members in 2006. The group is consulting staff over the proposals and hopes to switch staff over before the end of November.
