The former chairman of the Royal Bank of Scotland said City minister Lord Myners did know about both the size and terms of Sir Fred Goodwin’s pension, a submission to MPs released yesterday revealed.

In a letter to the Treasury Select Committee, Sir Tom McKillop said there was “no elaborate ruse” by him or other members of the RBS board to pay Sir Fred more than he was contractually entitled to.

Sir Tom said evidence given by Lord Myners to the committee needed “clarification” and insisted that the minister was told last October that the pension pot would be increased as a result of Sir Fred’s early retirement.

During a Treasury Select Committee hearing earlier this month, Lord Myners told MPs that he did not ask Sir Tom and RBS independent director Robert Scott the exact size of Sir Fred’s pension during a meeting on October 11.

But Sir Tom said the minister was told in a private meeting that day that the pension would be “the sensitive issue” and that it would be “enormous”.

He said the following day Mr Scott ran through further details of the arrangement.

“As well as referring to the undiscounted effect, and the consequence of early retirement and deemed service for the amount of the pension, Mr Scott also gave Lord Myners... a range of £15?million to £20 million as being Mr Scott’s best estimate of what the pension liability might be,” he wrote.

The former RBS chairman – who said he had been moved to write to the committee because “the circumstances relating to Sir Fred’s pension have not been accurately represented” – said Lord Myners did ask that Sir Fred give up part of his contractual entitlement to payment in lieu of notice during the discussion on October 12.

He said he believes Sir Fred agreed after direct discussions with Lord Myners.

But he added: “At no stage did Lord Myners or any other representative of the Government ask the RBS directors to attempt to alter any of the contractual terms relating to Sir Fred’s pension.”

Tory MP Michael Fallon, a member of the committee, said Lord Myners had misled parliament and should resign.

“It flatly contradicts him because he told our committee that he didn’t get any information about the pension, he didn’t ask for information and he wasn’t told about it,” he told BBC Radio 4’s The World At One.

“On the contrary, Tom McKillop makes it clear that Lord Myners was told each detail of the pension.

“He has completely misled the committee and misled parliament.”

His position looked “pretty untenable”, he added.

“The honourable thing to do now would be to resign.”

Sir Fred’s RBS package is providing him with a £700,000-a-year pension.

Lord Myners told the cross-party committee that he was telephoned by Mr Scott on October 12 and “during the course of that conversation was told of the then estimated transfer value of Sir Fred Goodwin’s pension”.

The Treasury has since said that the information the peer said was withheld from him until February was the fact that the RBS board was exercising its discretion in effectively doubling the pot to allow Sir Fred to receive payments at the age of 50.