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The government is pressurising former Royal Bank of Scotland chief of executive Sir Fred Goodwin to forego his £650,000 pension after record corporate losses from the bank.

Sir Fred, who earned his 'the Shred' nom de guerre over a reputation for cost-cutting, is already drawing on the pension despite being only 50, but Alistair Darling is putting pressure on him to cut back his retirement package.

Today RBS reported a £24.1 billion loss – the greatest in UK corporate history.

The total pension pot is estimated at £16 million.

The chancellor has stated the pension could not be justified.

"We've got the lawyers looking at this," Mr Darling told the Today programme.

"But I do think that on a voluntary basis, actually, Sir Fred could resolve this problem and he could do it quite quickly."

For Sir Fred to be stripped of his pension, it would have to be proved he was negligent, which is thought to be unlikely.

A spokesperson for RBS explained the bank's lawyers were making further investigations into the issue.

She added the bank was also in discussions with the UK Financial Investments (UKFI) – the government body that is managing the taxpayer's bank holdings – about Sir Fred's pension.

"I think that is a scandal," said Treasury select committee chairman John McFall told the BBC.

"He is leaving with not just good pension, but a pension that is eye watering."

Sir Fred, speaking to the Treasury select committee this month, defended his pension not being linked to the performance of RBS.

"My pension is the same as everyone else in the bank who is in a defined benefit pension scheme," he told MPs.

"It is determined in the same way as anyone else, and anywhere else, in a defined benefit pension scheme. I am not seeking to not be linked to the share price performance of the bank; that was achieved through the shareholding in which I have lost a lot of money."

He added he personally had lost £5 million from the fall in the RBS share price.