Civil Servant Pension Overpayment

Cardew

There has been much talk about the overpayment of pensions in the press over the last couple of days.

The problem, as I understand it, is that the GMP(Guaranteed Minimum Pension) has had the pension increases incorrectly applied to that element and/or paid both with the occupational and retirement pensions.

Does anyone have a ball park figure how this will affect future pensions.

Andy_L

According to this press release from my TU (Prospect)

"On 15 December 2008 the Cabinet Office wrote ...If you have not received a letter from the Cabinet Office this overpayment does not affect you.

The Cabinet Office is not yet in a position to tell members about the extent of the overpayment. .... members affected will receive a second letter once this information is available."
http://www.prospect.org.uk/pensions/cspension_overpayments

Biggles

It will vary from one person to another.

I've only been receiving my state pension for just over a year, so only seem to be overpaid around £2pw. As my pensions increase in April will be over £20, I won't be hit too badly.

But for someone who has been receiving these incorrect increases for up to 30 years (don't forget, they are 'increases on top of increases', so could mount up to a not insignificant figure), the revised pension come April could be an unpleasant surprise, especially if their total pension (and hence their pension increase at 5%) isn't very large.

BTW, it's not 'civil servant pensions' only, it's teachers, NHS workers, judiciary, armed force etc as well.

On 15 December 2008 the Cabinet Office wrote ...If you have not received a letter from the Cabinet Office this overpayment does not affect you.

That also relates to civil servants only, for all others the letter will come from the payer of your pension, in my case NHS Pensions.

Cardew

Biggles wrote: »

It will vary from one person to another.

I've only been receiving my state pension for just over a year, so only seem to be overpaid around £2pw. As my pensions increase in April will be over £20, I won't be hit too badly.

But for someone who has been receiving these incorrect increases for up to 30 years (don't forget, they are 'increases on top of increases', so could mount up to a not insignificant figure), the revised pension come April could be an unpleasant surprise, especially if their total pension (and hence their pension increase at 5%) isn't very large.

BTW, it's not 'civil servant pensions' only, it's teachers, NHS workers, judiciary, armed force etc as well.

That also relates to civil servants only, for all others the letter will come from the payer of your pension, in my case NHS Pensions.

Yes I was aware that it covered several groups of 'Government worker', I used the term Civil Servant as a form of shorthand.

My understanding is that the letter is going to all pensioners in those groups who are in receipt of the Retirement Pension(OAP!!)

I have an interest in finding out for an NHS and a armed forces pensioner both of who have rec'd 'The Letter'.

However the press/government statement is that only 5% of those with occupational pensions are affected. Well surely the majority of those with an occupational pension will be in receipt of a retirement pension(age 60 females and 65 males)

Can you please explain how you have reached the figure of £2 a week(£104pa) You appear to have an occupational pension of approx £20k.

The Times yesterday spoke of £25pa overpayment per £10,000 pension.(which is half the figure you suggest) However as you say had you been in receipt of the retirement pension for x years the inflation increases applied to your £2 a week could have made it £3 a week.

Thanks.

Biggles

Cardew wrote: »

My understanding is that the letter is going to all pensioners in those groups who are in receipt of the Retirement Pension(OAP!!)

No, the letter only went (in theory!) to those who may be affected by the overpayment. Those who haven't received a letter can consider they aren't affected (again, in theory).

Can you please explain how you have reached the figure of £2 a week(£104pa).

The letter explains (very badly!) that the overpayment is due to the annual pensions increase being applied to the GMP by both the public service pension and the state pension. This isn't very helpful, as my annual pension increase letters don't mention GMP once. But this year (my first year of a state pension increase) my NHS pension was increased by exactly 3.9% but, on my state pension letter, the item 'Pre-1997 Additional State Pension' was increased by more than 3.9%, to the tune of £2.10. I take this to be the overpayment to which they refer.

The Times yesterday spoke of £25pa overpayment per £10,000 pension.

I am hesitant to delve into matters I don't sufficiently understand (that's a new one for me!) but, as the overpayment only relates to the GMP, I'm not sure how much the total pension has to do with it. But I would think the most relevant factor is how long the pensioner has been receiving the state pension, as the problem is one of erroneous increase on top of erroneous increase; the cumulative effect could be considerable, as it may have continued for up to 30 years. And if I was receiving £100pa too much after only one increase, I really find £25pa hard to believe.

Cardew

Biggles,

I note that the Times has changed the £25 to £250! however like you I cannot see how the GMP element is affected by the size of Pension.

http://www.timesonline.co.uk/tol/news/uk/scotland/article5355727.ece

http://www.timesonline.co.uk/tol/news/politics/article5355493.ece

Ms_Chocaholic

My mum gets my late dad's Civil Service Pension and she's just had a letter saying she's been possibly overpaid.

She is concerned that because my dad paid into SERPS that her state pension will also be affected - can anyone confirm whether this will be the case. She is 75.

Andy_L

Cardew wrote: »

Yes I was aware that it covered several groups of 'Government worker', I used the term Civil Servant as a form of shorthand.

Not a great choice, putting on my pedant hat: the Civil Service, at just under 1/2 million, is less than 9% of the Public Sector.

Cardew

Andy_L wrote: »

Not a great choice, putting on my pedant hat: the Civil Service, at just under 1/2 million, is less than 9% of the Public Sector.

I concede you are 100% correct! However a semantic discussion on the classification of those affected will not take the thread much further.

Debt_Free_Chick

Biggles wrote: »

The letter explains (very badly!) that the overpayment is due to the annual pensions increase being applied to the GMP by both the public service pension and the state pension. This isn't very helpful, as my annual pension increase letters don't mention GMP once. But this year (my first year of a state pension increase) my NHS pension was increased by exactly 3.9% but, on my state pension letter, the item 'Pre-1997 Additional State Pension' was increased by more than 3.9%, to the tune of £2.10. I take this to be the overpayment to which they refer.

The Pre 1997 Additional State Pension is the GMP (Guaranteed Minimum Pension).

Of the total GMP, any amount relating to scheme membership before 1988 should not have been counted when the NHS scheme calculated your increase. And the GMP earned between 1988 and 1997 should have been increased by 3% only. Your State pension should then have paid an increase of 3.9% on your pre 88 GMP and an increase of 0.9% on your post 88 GMP - as these amounts were not paid by the NHS.

Except - of course - they were paid by the NHS pension scheme so you received the increases twice.

Back to the OP .....

There is no way of estimating what the effect could be on any particular member's entitlement - without knowing the amount of their GMP (pre and post 88), the date they retired and the precise nature of the error. I believe it's as I've set out above and the media suggest that the error goes back to 1978, which means that "from day one" the affected public sectgor scheme pension increases on GMPs have duplicated what was already being paid by the DWP/DHSS. (Technically, they can't have started in 1978 - more likely to have been 1980 as the first year in which the increase was duplicated, but not that important). However, for someone retiring today, their GMP could be as much as £8k (approx) - but this is the maximum amount (again, approx) NOT the average amount of GMP. To get the maximum one would need to have paid maximum NI since 1978 i.e. over the Upper Earnings Limit which is £40k this year, so a career-long nurse retiring today is going to get nothing like a maximum GMP.

A big factor will be compounding, though. Take someone who retired in 1990 with 10 years worth of GMP. They've now received 18 years worth of increases, with each years erroneous increase applied to the previous years erroneous increase.

Correspondence from the DWP would probably show the pre and post 88 GMPs (annoying labelled as the contracted out deduction, I think) - particularly any letter that explains how the increase in the State Pension has been calculated.

In the private sector the arrears would probably be collected from the pensioners, as the trustees of the scheme (usually) have no authority to pay "extra" i.e. above what members are entitled to, without the employer's agreement. And if the employer is not prepared to allow the arrears to go uncollected, the trustees would have to recoup them from pensioners - probably in instalments and/or by witholding future increases until the pension reached the correct level.

HTH

Biggles

My (standard) letter of 15 Dec says, "We will write to you again before the end of February 2009 to let you know if you are affected and if so how".

Now, I don't know about anyone else's calendar, but mine says it's March. Has anyone got the second letter telling them whether they're affected and how much by?