RBS bailout cash will be used to prop up pension scheme

More than £800m of the government cash handed over to the Royal Bank of Scotland has been earmarked to prop up the bank’s staff pension schemes, which have fallen into deficit.

To ensure generous pension promises are met, RBS has revealed in its annual report that it is planning to inject £807m into various staff and executive pension schemes.

This includes the notorious £703,000-a-year payout promised to Sir Fred Goodwin, the former chief executive of the bank.

The pension funds appear to have lost hundreds of millions of pounds by investing in RBS shares, which dropped around 75% in value from £69m last year to £15m in February. The value of other RBS instruments in the pension funds has reportedly fallen from £606m to £421m.

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Pensions at RBS are among the most generous in the UK, as most staff contribute nothing but accrue benefits enabling them to retire at 60 on two-thirds of their final salary after a 40-year career.

Last month, unions condemned as irresponsible RBS’s briefing about a restructuring plan that could lead to 20,000 job cuts.