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RBS caps final salary scheme

Royal Bank of Scotland has announced plans to cap its final salary pension scheme for 62,000 workers in a bid to cut costs.

The move comes after former chief executive Sir Fred Goodwin walked away with a pension pot worth £17m.

In a statement released today, RBS says it is capping the amount of pensionable salary increases to the lower of 2 per cent annually or the rate of inflation.

The bank has also proposed reducing the lump sum payable on early retirement for members opting to take an immediate undiscounted pension.

RBS says it has begun consulting with trade union Unite on the plans and expects to complete talks before the end of November.

RBS closed its final salary scheme to new members in 2006. It says only a third of current employees are members of the generous scheme.

RBS head of human resources Neil Roden says the reforms seek to strike a balance between reducing the costs and future liabilities of the scheme to the business and protecting the welfare of existing staff and scheme members.

He says: “The rising cost of pension provision is an issue for RBS and for all companies at this time. 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.”

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