The bank has proposed that staff on final salary pension schemes have their pensionable salary capped at 2% a year, or the annual rate of inflation. Alternatively employees have been told they could move their pensions into defined contribution schemes, not linked to their final salary, in which the employer will pay 15% in annual contributions.
Neil Roden, head of HR at RBS, told the Daily Telegraph: “The rising cost of pension provision is an issue for RBS and for all companies at this time. Only one third of our staff are members of the UK defined benefit pension scheme, which we closed to new members in 2006.
“This is an expensive scheme for our shareholders to fund and a generous one in comparison to the market. It is a pragmatic and necessary course of action and not a decision the board have taken lightly.”
But Rob MacGregor, national officer at the union Unite, said: “This is a body blow to tens of thousands of staff working at RBS. The company intends to cap pensionable future pay rises and promotions at 2% which will erode workers’ pensions over time.
“Against the backdrop of Sir Fred Goodwin’s bumper pension these planned changes add insult to injury to workers paying the price for a crisis for which they hold no responsibility. RBS staff, who already face great uncertainty in the face of major job losses, now face a future with retirement benefits severely reduced.”