Sir Fred needs to keep his pension, for our sake.

I try not to get too political most of the time – I’m not really a political animal so there are people who can argue the relevant points much better than I can.

This whole issue around Sir Fred Goodwin’s pension stinks. The ex-Chief Executive of RBS is set to receive about £700,000 a year from his pension pot. But it’s not the size of his pension, in light of the failings at the bank, which stinks. It’s the government’s reaction. Sir Fred has had a long career in banking which came to an ignominious end with the near collapse of RBS under his stewardship – mainly due to the strains of having expanded far too quickly in a rapidly disintegrating economy. This is a failing of Sir Fred’s because he is ultimately responsible for the actions of the bank. I doubt that he alone made many of the decisions though. There will be a whole layer of senior management who provided “intelligence” to Sir Fred to help him make these decisions. These people have the benefit of anonymity, even though they are just as culpable, in real terms, for the bank’s demise as its CEO. And it’s not as if he is generally incompetent – if he was it’s very unlikely (although, I agree, not impossible) that he would have risen to a position of CEO of, at one point, the world’s largest company (£1.9tn in assets in 2008). Should he have had some magical device that allowed him to presage the fall of our economies before anyone else? Many, many people have made much more disastrous decisions than Sir Fred – at least the bank is still (just) a going concern.

This brings me back to his pension. The return from your pension is not performance related. This is very, very important so I will repeat it. The return from your pension is not performance related. Your misdemeanours during your working life do not affect your existing pension pot. Would it be reasonable for someone to have built up their pension pot during their working life – having performed in an exemplary fashion for 35 years – only to have it taken away because you made some bad decisions in your final year at work? Think about your own pension. Imagine that the government could half it, or reduce it to 10% of its size because they didn’t like the decisions you had made at work. The numbers are different, but the principle is the same.

There is the possibility that the government may try to change the law so that they can claw back some his pension fund. Imagine that – the government don’t like the fact that the media are making them look bad by jumping on this ill-thought-out bandwagon so they think they will change the law to make them look like the crusading hero, “retrieving the ill-gotten gains of the fat cats”. Hmmm… fat cats, maybe, but ill-gotten gains? No. Sir Fred was simply paid for doing a job. Paid very, very well, with a very nice pension, but no-one complained a year ago when the bank was making enormous profits and making everyone (including the government) look good. And this is a critical point: Part of the reason Sir Fred was in that role was that he was offered an attractive package to take it on, and this package was designed and agreed by a group people who really, really wanted him at the helm. To coin a phrase – either he was actually very good at his job, or he knows where the body’s buried.

Whatever happens, the rules of law (and his employment contract) need to be followed. If they are not then this does not bode well for us. A government that changes laws to suit its own ends… I’ve read about that somewhere.