Ability of a Pension Trustee to reclaim past payments that they have overpaid?

Andrew_Dovernor

I have just received a letter from Innogy Group who look after the Electricity Supply Pension Scheme.

They are stating that they have miscalculated the SERPS element paid since my late husband died on my Widows Company Pension.

This amounts to £8,005.20, but they are saying that any debts over 6 years cannot be legally reclaimed, and have therefore lowered this to £3,566.74.

They are calling this a debt, but I have not borrowed anything from them. They have miscalculated and paid a higher amount, to which I was not aware.

This income has already been taxed, but they are asking for the gross sum, and have offered a 6 year repayment, but will automatically take this overpayment starting in April 2019 from my existing Widows Pension.

They are also lowering my Pension going forward to the correct amount, to which I accept, as the error has been raised, but 'why are they able to claim this from me when I have received a stated Company Widows Pension payment, and I was not privy to any calculations'?

Surely, the error should simply be accepted by the Trustee Company and the correct Widows Pension paid going forward?

Are they legally entitled to reclaim this sum, and why?

DD

xylophone

See https://www.pensionsadvisoryservice.org.uk/pension-problems/making-a-complaint/common-concerns/mistakes-and-overpayments

Contact TPAS if you require assistance.

dunstonh

This amounts to £8,005.20, but they are saying that any debts over 6 years cannot be legally reclaimed, and have therefore lowered this to £3,566.74.

That indicates they are treating it fairly.

They are calling this a debt, but I have not borrowed anything from them. They have miscalculated and paid a higher amount, to which I was not aware.

A debt is money you owe. They are just not dressing it up by calling it other things.

This income has already been taxed, but they are asking for the gross sum, and have offered a 6 year repayment, but will automatically take this overpayment starting in April 2019 from my existing Widows Pension.

That seems reasonable again as the general guide is that they should allow you to repay in a similar period to the length of time it built up.

Are they legally entitled to reclaim this sum, and why?

Yes. An error doesnt give you legal entitlement to keep money. Much in the same way if the error was that you were not paid enough, they couldnt keep the amount underpaid.

What they are doing seems to fit with current guidelines from the pensions regulator. They are letting you keep everything over 6 years and not asking for it to be returned and they are giving you the long repayment period. It all fits with current expectation and fairness levels.

Paul_Herring

dunstonh wrote: »

This income has already been taxed, but they are asking for the gross sum, ...

That seems reasonable again as the general guide is that they should allow you to repay in a similar period to the length of time it built up.

DH, How does the tax bit of that point work in this sort of situation?

dunstonh

Paul_Herring wrote: »

DH, How does the tax bit of that point work in this sort of situation?

The pension is reduced at gross level so less tax is paid over the next 6 years.

Paul_Herring

Ah - I somehow got the impression they wanted it paid back as lump sums from post-tax income, not reducing the payments (before tax) even further to recover the amount.

Dox

dunstonh wrote: »

An error doesnt give you legal entitlement to keep money. Much in the same way if the error was that you were not paid enough, they couldnt keep the amount underpaid.

What they are doing seems to fit with current guidelines from the pensions regulator. They are letting you keep everything over 6 years and not asking for it to be returned and they are giving you the long repayment period. It all fits with current expectation and fairness levels.

Not quite. The Pensions Regulator isn't the authority here: the Pensions Ombudsman is. There may be reasons why repayment is not required (e.g. 'change of position'). See https://www.pensions-ombudsman.org.uk/guidance/overpayments/

Alexland

dunstonh wrote: »

The pension is reduced at gross level so less tax is paid over the next 6 years.

But there could still be an impact if for example the overpayment was in a tax year where the OP paid a higher rate of tax than the tax saved when the recovery reductions occur?

Alex

dunstonh

Alexland wrote: »

But there could still be an impact if for example the overpayment was in a tax year where the OP paid a higher rate of tax than the tax saved when the recovery reductions occur?

Alex

If that is the case, then the OP should mention it.