The Government
revealed in December 2008 that they believed that public
sector pension scheme administrators had overpaid pensions to
up to 100,000 former public sector workers.
Those affected are pensioners who have passed the state
pension age (60 for women and 65 for men) since 1978. The
issue arises because anyone who has built up a pension in a public
sector scheme between 1978 and 1997 only gets part of their pension
increase paid by the pension scheme. Instead of splitting out
part of the pension (known as the pre-88 Guaranteed Minimum Pension
(GMP)), the pension administrators have paid the annual
increase on the whole pension. The increase on the pre-88 GMP is
paid with the state pension.
The pension scheme authorities will not be asking for the money
back in this instance, but the intention is to correct the pensions
from April this year.
The pensioners affected are covered by the NHS, Teachers', Civil
Service, Local Government, Fire Service, Police, Armed Forces and
Judges' pension schemes, in England & Wales, Scotland and
Northern Ireland. The majority of these schemes will have
written to affected pensioners by the end of February 2009 to
tell them how much their new, correct pension payment will be from
April 2009.
Generally, when a pension scheme overpays a pension, we would
expect the scheme authorities to be able to recover the
overpayment. We would also expect them to correct the pension
for the future. They have a right and a duty to do so.
But the Government has said that it will not be ordering schemes to
seek the past overpayments back, and schemes will only adjust
pensions to the correct level from April 2009. That means
pensioners will have received more money than they should have done
(whether they knew it or not). In this case, we think it is
likely that it will be difficult for the vast majority of
pensioners to make any additional claim for compensation for this
mistake.
This issue does not affect non-pensioners.
For more information, schemes have
set up dedicated helplines:
- NHS (England & Wales) 0845 610
1115
- Teachers (England & Wales) 0845 606 6166
(normal helpline number)
- NHS & Teachers (Scotland) 01896
892463
- Armed Forces 0845 121 2514
- Civil Service (Capita Hartshead) 0800 141
2858
Click here for further general
information about mistakes and overpayments.
Q & A's
The majority of pension schemes will write out to affected
pensioners by the end of February to tell them how much the new
payment from April will be.
The basic principle is that an individual is only entitled to
their correct benefits, as defined by their scheme's rules or
regulations and not to a higher sum that has been paid to them in
error.
Compensation is designed to put someone in the financial
position they would have been had no error occurred, and to address
financial injustice. Pensions are being put back to the correct
level, but not until April 2009. Furthermore, the overpayments are
being written off. These actions would normally be an appropriate
remedy when a pension has been overpaid.
The fact you might have been expecting your pension to continue
at the same level is not in itself any reason not to correct the
mistake. Nevertheless, if an individual has suffered upset as a
result of a mistake, a token payment may be made in recognition of
the distress and inconvenience. This is typically modest, in the
region of £50 to £250, and the overpayments (which pensioners are
being allowed to keep) are likely to be considered as adequate.
In rare circumstances, there might be an argument for keeping
the pension the same. Typically that would be where you entered
into a significant, irreversible financial commitment based on the
incorrect future pension, for example you entered into a pension
sharing agreement on divorce and have shared too much or too little
pension.
When schemes write to the affected pensioners they will provide
guidance on how pensioners can check whether they are receiving all
the state benefits they are entitled to.
The Government has only announced that it will allow schemes to
'write off' the overpaid pension increases that it has identified
as described above. Any other case will continue to be considered
on its own individual facts.
