Royal Bank of Scotland faced an embarrassing protest at its annual meeting in Edinburgh from bank workers furious at a raid on staff pensions.

Union members say RBS, unlike some other banks, is making employees pay for a rise in National Insurance contributions which they say will wipe out this year’s pay rise for thousands of staff.

The Unite and IBOA trade unions say the bank plans to pass on £18m of extra costs resulting from last month’s scrapping of contracted-out pensions, which will see a rise in National Insurance contributions for both employer and employees.

RBS is expecting staff to cover the cost of both increases, resulting in members having to pay in a mandatory extra two per cent into the pension scheme.

READ MORE: RBS braced for revolt over pay

Shareholder Simon Godfrey, speaking on behalf of 27,000 Unite members, told the meeting at Gogarburn: “It’s a disgrace...it will wipe out this year’s pay rise for thousands of staff.”

Mr Godfrey said 57per cent of Unite members in RBS report that they are already struggling with week-to-week bills, while 85per cent are working unpaid overtime each week.

The bank could not afford to pay the £18m yet “continues to put millions aside for litigation”, Mr Godfrey said.

RBS chairman Sir Howard Davies said the bank had injected £4.2billion into the pension scheme last year and ensure shareholders did not bear “unreasonable costs”, but a consultation on the bank’s proposals was still under way.

Fionn Travers-Smith of the Campaign for Ethical Banking said RBS was responsible for one in two of the ‘last bank in town’ closures last year, and claimed the bank’s community impact studies were “box-ticking exercises”.

Chief executive Ross McEwan said counter transactions belonged to “a bygone day” while mobile usage was up 400per cent. “If we don’t move forward we will be left with a bank that is out of date.”