Questions over £580k annual RBS pension

Your report and comment (19 March) state that Gordon Pell is the "last link to" or "last remnant of" Sir Fred's tarnished regime at RBS.

Not so – Colin Buchan, appointed to the board in 2002 for his "experience in very large risk management", remains in place. He has sat on the remuneration committee for years – instigating the very bonus policies that encouraged "large risk" – and is now its chairman.

Mr Pell retires at 61 with quite possibly 30 years of index-linked pension ahead for 39 years of working life. His pension of 580,000 would probably cost 16 million at current actuarial rates rather than the 13.5m quoted.

Since RBS reported that ex-director Larry Fish's pension of 1.6m was 98 per cent unfunded, and the RBS scheme's shortfall is several billion, we can infer that Mr Pell's was not fully funded before the bail-out and that we will be paying for it too, rather than the 28,000 maximum permitted under the Pension Protection Fund for bankrupt firms, which a competent government would have insisted on as a precondition of the bail-out.

Such levels illustrate both the unsustainability and inequity of pensions based on two-thirds of final salary, and the ludicrously high level of such salaries in the first place – in Mr Pell's case, of almost 40 times the average and 80 times the minimum wage, even excluding his bonuses and other benefits. This has been obvious for several years, but nothing has been done because the government has maintained the state pension at far too low a level, was dazzled by the City and is still reluctant to deal with the 1 trillion public sector pension liability.

Nor did Sir Fred "reduce his pension by half". He first took over 2 million in tax-free cash from his "pot", so his actual reduction was 30 per cent.

JOHN BIRKETT

Horseleys Park

St Andrews

That nothing can be done about Gordon Pell's preposterous pension (your report, 19 March) just flabbergasts me. We have a government that could ride to the rescue of the same bank (and others) and cope with umpteen times the amount that is to be given to Mr Pell. It had no inhibitions about that.

Likewise did the same government defy a far greater authority when it put its lot in with the US and invaded Iraq. If neither the UN nor global banking institutions have been able to stop a government doing what it has defended as "right", how come it is suddenly powerless to promote a better "right" than those and put an end to this financial chicanery?

IAN JOHNSTONE

Forman Drive

Peterhead