The great pension debate - an uneasy civil servant writes...

I've watched the debate over Sir Fred Goodwin's pension with increasing unease. I suppose that this stems from two things, firstly my belief that a contract is a contract. Secondly, when a government claims that it will take retrospective action, then bad law is likely to result.

There is little doubt that the pension pot available to Sir Fred is absurd and, to many people, an outrage. Many will argue that the level of risk borne by him has been rewarded way beyond what can be justified. However, a deal is a deal.

One of the great attractions of the United Kingdom as a place to do business is the robustness of our legal system, especially that pertaining to company law. A contract, if breached, can be contested through the courts and the historic probity of our legal system makes it likely that any party acting legally will receive justice.

If, however, the Government decides that, just because the public don't like something, you should just override the law, the question arises, just what else might they override in pursuit of popularity? Is the legal framework reliable? Should we be moving our business to a more secure jurisdiction?

Indeed, if Sir Fred's legal entitlement to a pension can be taken away from him by the Government because it is unpopular, who else is at risk?

I'll declare an interest here. As a civil servant, I benefit from what is perceived to be a rather generous pension scheme which is often the subject of attack by the Press and by politicians. For more than twenty years, I've been told that this pension provision is factored in when considered an appropriate level of pay. And, I have to say, I'm not expecting to be as rich as Croesus when I qualify for it (I've just had an update of what I can expect on retirement). It would, however, be popular amongst the public if it were to be taken away.

Liberal Democrat Voice has now launched a humourous campaign to 'shred John Prescott's pension'. I'm not entirely convinced that it is funny, but it does make a point.

No, if you really want to deal with the issue of Sir Fred, use the existing law to see if he has done anything illegal, and punish him accordingly. Whilst stupidity is not an offence punishable by the State, and there is no doubt that the various boards of the banks made some very foolish decisions, if the banks had been allowed to go bankrupt, Sir Fred would have got nothing.

Perhaps that offers a way forward...