Pension overpayment

Nadbags85

Hi, my Mother in Law was paid out a considerable pension lump last year and has been receiving a monthly income ever since. The pension wasn’t one she recognised so she challenged it multiple times over the decade she’s received correspondence about it. Nobody has been able to tell her where it came from or the connection to her. She’s the only person who’s ever lived at her address and the company assured her the pension is hers. She sought advice from financial advisers who also assured her many people her age have pensions they don’t realise they are entitled to and millions go unclaimed because of this.

They also said there’d be a lot of due diligence checks and she should just trust that.

When she was sent the forms she again challenged them, sent her ID and proof of NI number etc. They paid her the cash lump sum and monthly income thereafter.

 She’s recently had cancer and was planning on retiring early but just wanted to be triply sure the income was sound before terminating employment and asked the pension company to confirm she could indeed rely on the monthly income indefinitely.

They’ve responded saying they made an error and have asked her to repay the cash lump sum and monthly income received to date!! This is a huge sum of money she no longer has. She has trusted this safety net after being assured time and again this was her entitlement and she’s distraught they have not only taken it from her, but they are asking her to return the money paid in error.

We have escalated a formal complaint but they are adamant they need to see proof of her financial situation before they rule on her complaint?! They’ve already accepted it’s their error and she received the funds in good faith? I don’t understand why knowing her financial position should matter to their investigation into their incompetence and the dreadful position she’s now been placed in???

Does anyone have any advice at all? TIA 

Dox

Poor lady. She's done everything right and this happens.

Normally any overpayment of pension doesn't give rise to any entitlement on the part of the recipient to keep the money, on the basis this would be 'unjust enrichment' because the money isn't theirs and should never have been paid to them.

There is one particular defence known as 'change of position' where someone receives money in good faith (and it's hard to see how she could have tried harder to establish whether or not it was rightfully hers), spends it and is not then in a position to repay - in other words, they irrevocably change their position in reliance on the money in question. That's why the pension company are asking for details of her financial position. If she has disposed of what you describe as 'a huge sum of money' since last year, she needs to explain where this went and why it isn't available to repay them.

Yes, this must be incredibly infuriating, upsetting and the last thing your MIL needs, especially now, but it is probably the quickest and easiest way to get the matter put to bed.

If it doesn't resolve matters, then a complaint to the Pensions Ombudsman (who deals with maladministration, which is what this is) is your next port of call - but I seriously hope it won't get that far.

gm0

This sounds like a situation where the timeline and correspondence trail prior questioning the payments in advance and then again and the fact that your relative is now retiring with ill health would make excellent colour for a back page story for the national newspapers money pages.  Nasty big company X bullying sick elderly consumer after their own incompetence.  Despite repeated prior prompts and reminders.  Now being "difficult" about a complaint.  Lay it on nice and thick.  They don't like that kind of brand damage at all. If it's a big company pension scheme administered by some less visible bureaucracy - embarrassing both of them can help.

So timeline, behaviour, complaint.  Letter to the money pages. Brand name nice and visible. Copies to CEO's office(s) if there  is more than one outfit involved.  Amazingly complaints and situations getting bureaucratic war of attrition get settled when bad publicity comes knocking.

This in no way relates to whether or not you are legally obliged short of bankruptcy to return it.  Or to whether you can. 
It's just a suggestion based on observed large company behaviour faced with adverse publicity about their incompetence and customer hostility. 

Someone has screwed up badly.  If it's outsourced for pennies on the account per year this is a huge deal for the paper pushers outfit who may have to reimburse the scheme (for the correct ultimate beneficiary).   All depends upon where the unrecoverable bill is likely to land.  Worth understanding who is doing what for whom with this scheme in drafting the letter or letters.

If you wanted to be nice you would offer a full and final settlement at low pence on the pound (based on ability to give it back and netting your distress and incovenience (the complaint).  If you wanted to be nastier you would go slow on giving them information (not actually refuse) and simultaneously generate a shitstorm around FOI subject requests and GDPR questions  around what they hold on and correspondence related to her and the limited uses to which any information as may be disclosed for the complaint may be put.  You are not their customer and yet - here you are.    Given your relative is already distressed this latter bureaucratic "info" war causing inconvenience and cost to make it easier to make you go away approach may not be for you.

Hopefully somebody with domain knowledge here or CAB can clarify the true position on whether this is "chancing their arm" to cover it up or more distressingly an actual (theoretically) recoverable debt caused by their repeated errors.

Good luck and patience as it may be needed

Dox

gm0 said:

Hopefully somebody with domain knowledge here or CAB can clarify the true position on whether this is "chancing their arm" to cover it up or more distressingly an actual (theoretically) recoverable debt caused by their repeated errors.

Read the post above, which confirms it could be a recoverable amount for the reason explained.

Nadbags85

Thank you for your comments so far. It certainly is a tricky situation and I doubt there’s any ‘easy’ route. The most frustrating thing about the situation is had she not made the enquiry about the monthly income, it wouldn’t have been identified. Now they’re acting purely in their need to recover the money and their ‘legal obligation’ to ensure payments go to the correct participants without the slightest acknowledgment they’ve already failed dramatically on that! 
I fully appreciate there will be a procedure to follow but they’ve been so incompetent to date, I have no faith that they will manage this appropriately, or fairly. There was one point a few years ago that she pointed out to the scheme the NI number on the paperwork was not hers. They asked her to send in proof, and they simply changed the NI number over rather than see it as a red flag! That’s the level of idiocy we’re talking about.

I’ve heard the Ombudsman has an early dispute resolution service. Perhaps I can speak to them to get a feel for what can be done. Thanks for the input.

Nadbags85

Dox said:

Poor lady. She's done everything right and this happens.

Normally any overpayment of pension doesn't give rise to any entitlement on the part of the recipient to keep the money, on the basis this would be 'unjust enrichment' because the money isn't theirs and should never have been paid to them.

There is one particular defence known as 'change of position' where someone receives money in good faith (and it's hard to see how she could have tried harder to establish whether or not it was rightfully hers), spends it and is not then in a position to repay - in other words, they irrevocably change their position in reliance on the money in question. That's why the pension company are asking for details of her financial position. If she has disposed of what you describe as 'a huge sum of money' since last year, she needs to explain where this went and why it isn't available to repay them.

Yes, this must be incredibly infuriating, upsetting and the last thing your MIL needs, especially now, but it is probably the quickest and easiest way to get the matter put to bed.

If it doesn't resolve matters, then a complaint to the Pensions Ombudsman (who deals with maladministration, which is what this is) is your next port of call - but I seriously hope it won't get that far.

Just in response to the spend of the funds, the family have never been well off. When she was diagnosed she so an opportunity to ‘provide’ for her family and secure herself financially. She cleared some debt, soent a modest amount on a car and holiday and distributed the rest amongst her children. She wanted to feel like she could do something of worth and that, for her, was what she did. She has already explained this to the pension company and can evidence this from the outset but it feels very intrusive to have to justify spending the money she thought was hers to do what she wanted with. The family certainly aren’t in a position to pay her back and it feels so unreasonable for her to be challenged on her financial situation. It feels like it shouldn’t matter given the level of error on their part. It’s wrong.

Nadbags85

Just as an update I’ve since spoken to the pension ombudsman and am feeling much more hopeful. It turns out that whilst it is true to say the scheme have a legal obligation to recover the overpayment and ensure the correct recipients of any benefits paid, there is such a thing as ‘creating an expectation of benefit’. This is tougher for them to unwind as it’s not a simple matter of them just paying money to the wrong person....

The fact my MIL has correspondence going back several years from them identifying her as the beneficiary of the pension means she has a perception of entitlement that has created a reliance/dependence on the security of the benefit. As such she can counter-claim against the scheme as they’re not actually allowed to just turn around after all this time and say ‘oops, it’s not yours so we’re going to stop your benefit and  please pay us back what we’ve given you’...

The ombudsman are going to look at it from here so fingers crossed it reaches a more just outcome for her. 

Albermarle

Maybe will be a victory for common sense in the end . Good Luck. 

Nadbags85

Thank you, much appreciated.