by Alan Lenton, West Lancashire Pensioners Forum

Gilded pensions, gilded bonuses, paid by the banks we own to the failed executives.

In a statement on Thursday night, tax-payer owned RBS said CEO Mr Stephen Hester would get a bonus of £963,000 as the failed bank bowed to political and public pressure to ensure its chief executive was not handed more than £1m.

However, the bank admitted he was still potentially eligible for an award under a long-term incentive plan (LTIP) worth as much as £4.8m. This means his total pay package for last year including his £1.2m salary and £420,000 pension could reach £7.38m. If Mr Hester were to receive his maximum LTIP grant it would take the total value of the awards made to him since he took over as chief executive in October 2008 to about £27.5m.

By contrast, today - disgracefully - there are 2.5 million pensioners living in poverty in the UK. Only one in three private sector workers is now a member of an employer-sponsored pension scheme, public sector pensions are under threat, and the state pension is now worth just 15% of average male earnings.

On the other hand a quarter of all tax relief on pensions, amounting to more than £10bn annually, goes to the richest 1% in the country. We hear about gold-plated public sector pensions, yet the real gilded pensions are to be found in the boardrooms of private companies that have abandoned provision for their workforces.

A fair pension for all is affordable in the sixth largest economy in the world, if we choose it to be, but we don’t. UK pensioner poverty is among the worst in Europe – only Cyprus, Latvia and Estonia abandon their pensioners to a greater degree. France spends over twice as much on pensions as the UK, Germany two-thirds more. It is simply not true to say that the UK cannot afford better pensions when nearly every other European country does better by their pensioners. The truth is that the value of the state pension has been in decline for 30 years. In that time the state pension has gone from being worth 25% of average male earnings to just 15%.

The basic state pension is currently £102 a week, worth only 57% of the government’s official weekly pensioner poverty level of £178. Two and a half million pensioners in the UK live below that level. Even before the above inflation energy price rises this year, 3.5 million pensioners lived in fuel poverty. Many pensioners therefore rely on means-tested benefits like the pension credit, council tax benefit and housing benefit. However, because of the stigma attached to claiming, over a million
pensioners entitled to pension credit do not claim it.

Research estimates that the cost of means-tested benefits is currently £13bn per year. We don’t want an equality of misery, but fair pensions for all, for public, private and state pensions. Meanwhile, the RBS share price, the shares we own, has fallen by 25% this year.

So why is the CEO worth any bonus?

So why is the CEO worth any bonus?

Because Alanl the former Labour Government wrote it into his contract.

Agree with the rest and something needs to be done as the position will only get worse.

You are correct, Mr Mulder, and a contract is binding. I heard a Liberal Democrat MP, Jeremy Browne, a Foreign Office minister, make an outspoken appeal to Mr Hester to put the taxpayer before his personal wealth and refuse to take the shares. He said "No-one's forcing him to take this money. He could struggle on with £1.2m salary." In effect, if he did that it would be a personal renegotiation of his contract, something that would be much appreciated by us all, I'm sure.

Which he has done! Still an obscene basic salary though!

It seems that Mr Hester is also potentially eligible for an award under a long-term incentive plan, worth as much as £4.8 million. Another obscenity?

The worse thing about all of this is the simple fact that neither RBS or NatWest hit there target for lending to small businesses!