Just months after paying Sir Fred Goodwin, the Royal Bank of Scotland’s disgraced previous boss, a retirement lump sum of £12.3 million, RBS has now slashed pension benefits for over 60,000 workers.
Yesterday the bank continued to anger its loyal staff by capping pay-outs to members of its final salary pension plan. This was all with the aim to save on money – an estimated £100 million a year will be cut from its pension contributions.
RBS is not the only bank to cut on pension benefits. Barclays has previously announced the closure of its final salary pension scheme to new members. Now, along with RBS, Barclays is shutting it to existing members of the bank also.
RBS’s current pension scheme entitles employees to a fixed percentage of their final salary when they retire, dependant on their length of time spent at RBS. However, the new rules now limit increases in workers’ pensionable pay – to either the rate of inflation or 2% a year; whichever is lower.
Speaking about the changes, Neil Roden, human resources chief at RBS, said: “It is a pragmatic and necessary course of action and not a decision the Board have taken lightly.”
However, experts suggest that members of the RBS scheme are in line for much more comfortable retirements than many private sector workers in the UK.
Ros Altmann, an independent pension’s expert, said: ‘Taxpayers are standing behind this bank. The fact that staff are accruing a pension linked to inflation is something they should be thankful for.’