Pension overpayment

rosalind52

Good morning,

I have had a Bank pension being paid since Sept 2007.I took the cash lump sum of £8461, spent on a bathroom refurb. At the time I was sent a form detailing the lump sum and a reduced pension of £1250? per year. I signed the form and returned it to them.I do not have a copy of the form.
I am divorcing, had to ask for a cash value of my Pension pot for the Form E, the Bank have,only through my forced enquiry, discovered they have overpaid me.Instead of the £1250? pa, they have paid me £8461 pa, the same amount as the lump sum.
The annual income statement from the Bank has twice been used to obtain mortgages, including the current one.
They are reducing the payment from Sept from£838 net to £106 gross.
It never occurred to me that they had made a mistake, and the form I returned, as far as I can find,is the only place where the error shows, and I have no copy of it. Until now.
Repayment of the money has not specifically been mentioned, yet, but there is a veiled reference to it as "how to manage the overpayment going forward".
I am 69 next month, had hoped to take over the mortgage on my own after my divorce, now I am likely to loose my home of 20 years,and be forced to pay back thousands I dont have.
Ros





.

Silvertabby

rosalind52 said:

Good morning,

I have had a Bank pension being paid since Sept 2007.I took the cash lump sum of £8461, spent on a bathroom refurb. At the time I was sent a form detailing the lump sum and a reduced pension of £1250? per year. I signed the form and returned it to them.I do not have a copy of the form.
I am divorcing, had to ask for a cash value of my Pension pot for the Form E, the Bank have,only through my forced enquiry, discovered they have overpaid me.Instead of the £1250? pa, they have paid me £8461 pa, the same amount as the lump sum.
The annual income statement from the Bank has twice been used to obtain mortgages, including the current one.
They are reducing the payment from Sept from£838 net to £106 gross.
It never occurred to me that they had made a mistake, and the form I returned, as far as I can find,is the only place where the error shows, and I have no copy of it. Until now.
Repayment of the money has not specifically been mentioned, yet, but there is a veiled reference to it as "how to manage the overpayment going forward".
I am 69 next month, had hoped to take over the mortgage on my own after my divorce, now I am likely to loose my home of 20 years,and be forced to pay back thousands I dont have.
Ros





.

I sympathise with your predicament, but have to ask why you didn't query this back in 2007?  A monthly payment of £705 is way in excess of the £104 you expected, and a quick phone call would have nipped this in the bud after just one or 2 overpayments.

I know you think that the bank shouldn't have made this mistake and indeed they shouldn't have.  However, being perfectly honest here, if the error was the other way round - ie they paid you £104 instead of £705 - would you have also just accepted that this was correct?  It was your request for a divorce CETV that generated the re-calculation, otherwise this overpayment could have continued until your death - when it would have been likely that your estate would have had to pay the total overissue. 

You may be aware that there is a complaints process open to you, which could eventually be referred to the Pensions Ombudsman for a decision.  But please note in that other, similar, cases whereby the error was so large the the complainant can't have reasonably believed it was correct, the Ombudsman has found in favour of the pension fund.

Going forward, you may have some hard decisions to make.  Do you have family able to help?  Plus it may well be that your divorce  CETV will be nil, as your account is in arrears, meaning that you may get more of the other marital assets including your husband's pension CETV. 

xylophone

How long did you work for the bank?  What was your salary on leaving?

You took your bank pension in 2007 at the age of  55.

Was the Normal Scheme Pension Age 60?

If so, then presumably you asked for your pension to be brought into payment early and so presumably were supplied with the figures on which you made your decision.

It never occurred to me that they had made a mistake, and the form I returned, as far as I can find,is the only place where the error shows, and I have no copy of it. 

You must surely have noticed that the pension you were receiving was in excess of what you could reasonably expect?

At all events, your pension will now be paid at the correct amount going forward - you surely  cannot expect to continue to be paid at a rate  several times what you are due?

With regard to any repayment the Bank may expect

https://www.allenovery.com/en-gb/global/news-and-insights/pensions-in-dispute/common-member-complaints/recovery-of-overpaid-pensions

It is virtually certain that the pension scheme was contracted out and  likely that you have a GMP as part of your bank pension.

Is a Contracted Out Deduction in respect of this pension shown on your state pension?

In view of the error, does this also require adjustment?

Silvertabby

xylophone said:

How long did you work for the bank?  What was your salary on leaving?

You took your bank pension in 2007 at the age of  55.

Was the Normal Scheme Pension Age 60?

If so, then presumably you asked for your pension to be brought into payment early and so presumably were supplied with the figures on which you made your decision.

It never occurred to me that they had made a mistake, and the form I returned, as far as I can find,is the only place where the error shows, and I have no copy of it. 

You must surely have noticed that the pension you were receiving was in excess of what you could reasonably expect?

At all events, your pension will now be paid at the correct amount going forward - you surely  cannot expect to continue to be paid at a rate  several times what you are due?

With regard to any repayment the Bank may expect

https://www.allenovery.com/en-gb/global/news-and-insights/pensions-in-dispute/common-member-complaints/recovery-of-overpaid-pensions

It is virtually certain that the pension scheme was contracted out and  likely that you have a GMP as part of your bank pension.

Is a Contracted Out Deduction in respect of this pension shown on your state pension?

In view of the error, does this also require adjustment?

Probably not.  The error would have been made by one person inputting the tax free lump sum figure into the annual pension box in the pension payroll system.  The HMRC notification would have been generated separately, and would - hopefully - have been the correct figure.

Going forward, OP is either receiving the pension she should have received from day 1, or just the GMP.  But the matter of the huge overpayment is still to be addressed.  If the OP's revised pension is indeed just the GMP, then it can't be recovered in instalments from that, meaning that the OP will receive a one-off bill. 

Not sure on this one, but as OP's husband will have thus far benefitted from the overpayment I wonder if this debt could be factored into the marital assets/debits scenario?

rosalind52

Hi, in answer to some of the questions-the normal retirement age for women at the time I was in the scheme was 55. I left the bank employment in 1981 when I was 29, and the amount I had in the pot grew each year.26 years passed before it became payable.
I cannot remember what the amount each month was, but each year the trustees increased the monthly amount, to its current level.I think in 2007 it was around £300 ish per month.
Yes, you are right, I should have paid more attention but, as I said, the letter I signed detailing the lump sum and the monthly pension I returned to them without taking a copy, so until last week I assumed the growth of the pot over 26 years was correct.

GrumpyDil

I think this would make more sense if you posted a response to the original thread rather than starting a new one. 

xylophone

https://forums.moneysavingexpert.com/discussion/6287517/pension-overpayment#latest

Hi, in answer to some of the questions-the normal retirement age for women at the time I was in the scheme was 55. I left the bank employment in 1981 when I was 29, and the amount I had in the pot grew each year.26 years passed before it became payable.
I cannot remember what the amount each month was, but each year the trustees increased the monthly amount, to its current level.I think in 2007 it was around £300 ish per month.
Yes, you are right, I should have paid more attention but, as I said, the letter I signed detailing the lump sum and the monthly pension I returned to them without taking a copy, so until last week I assumed the growth of the pot over 26 years was correct.

But how could you not have queried a monthly pension of over £700 a month when the maximum you were expecting was £300 a month and that before the commutation which gave the lump sum? 

jamesd

The original discussion is at this link:

https://forums.moneysavingexpert.com/discussion/6287301/pension-overpayment#latest

jamesd

First thing to know is that you do have options and losing that home and being forced to downsize and/or relocate to a cheaper area might not be necessary.

I hope that you're using a solicitor in the divorce. Ask them to help.

The effect of this long term is that the value of your pension is likely to be zero for divorce purposes. This is because the whole value of the mistake is normally repayable but the amount is likely to be capped at repayment of 100% of the monthly pension that you're really entitled to. If it's likely that you will live long enough you may still get some monthly pension. It's not likely that they will insist on a higher payment than this, though they might ask for it to be covered in your estate after your death. You could also try negotiating repayment that way to try to get some pension income.

Since the likely value is zero that would give you a higher share of other marital assets.

Equity release is ultimately what might keep you in your current home long term, replacing the current mortgage with an equity release one.

Ask the pension firm to make the payments to you at the correct level for initially the next year while the divorce is being sorted out and ask them to formally tell you what they consider the actual value to be long term for divorce asset split purposes.

Ask them if they are willing to consider paying the pension at the correct rate while you are alive and receiving repayment of the excess from your estate after your death, and on what terms.

Tell the pension firm that once you know the divorce settlement outcome you'll be in a better position to work out what is doable and make a proposal other than the temporary payments you're requesting for now.

MallyGirl

I have merged the threads