Sir Fred Goodwin, former chief executive of the Royal Bank of Scotland, has agreed to reduce his pension by 200,000 per year.

According to BBC reports, Goodwin has already taken a lump sum of £2.7 million and will receive payments each year of £342,500 instead of the previous arrangement of £703,000.

It is understood Fred ‘the shred' Goodwin's pension pot now stands at approximately £9 million, compared with £16.6 million reported in October 2008.

Royal Bank of Scotland and the Government are said to be satisfied with the new arrangement.