Overpaid Armed Forces pension for 12 years, do I have to pay it all back?

xylophone

My understanding is that it doesn't really matter that an error was made.  The problem is that the pension fund is down a substantial amount of money which means that other participants in the fund could potentially lose out.  So the money has to be paid back no matter what.

But it shouldn't be the victim of the error (whether overpaid or underpaid) who should lose out.

If the professional (who is PAID to do the job) makes the mistake, then it is the professional who is responsible?

badmemory

There does seem to be a lot of victim blaming in these scenarios & very little consequences for those perpetrating the error.  I do hope that it is my ignorance of these things that leads me to believe this.  I wait to be convinced.

artyboy

xylophone said:

My understanding is that it doesn't really matter that an error was made.  The problem is that the pension fund is down a substantial amount of money which means that other participants in the fund could potentially lose out.  So the money has to be paid back no matter what.

But it shouldn't be the victim of the error (whether overpaid or underpaid) who should lose out.

If the professional (who is PAID to do the job) makes the mistake, then it is the professional who is responsible?

I do wonder why pension administrators don't have to have indemnity insurance to cover the cost of their errors, in the same way that FAs do. I know someone will point out that they are not making good a loss here in the way that bad advice from an FA can lead to, but ultimately this is about preventing hardship due to a retail customer doing nothing more than acting in good faith and trusting the professional.

But as you say, there tends to be a bit of an attitude on here of 'tough luck, pay it back, it's not fair on the other scheme members' whereas in fact it should be required to be an insurable risk of mistakes made by professionals.

BikingBud

xylophone said:

One of the factors leading to me leaving the service was nobody could advise how the system would treat any further years I served. They said they couldn't provide financial advice. I only wanted them to say how the system would aggregate extra time to accommodate missing years. Nobody could answer 

If schemes can produce tables showing commutation factors and tables showing  contribution rates (all matters of fact, not opinion or advice) it is difficult to understand why there was no table/chart/decision tree to provide the information you sought. 

Unless you were in a unique situation, presumably others before you had drawn a pension under the circumstances you describe so that some sort of system had been devised?

Did you put your question in writing so that the administrator would have been required to give an explanation in writing of why your question could not be answered?

No but yes but that's another discussion entirely.  

CedricsDad

MEM62 said:

Brie said:

molerat said:

Do you have to pay it back - it is not yours so yes

but

Can you appeal - yes

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-problems/dealing-with-mistakes-and-overpayments-with-your-pension

Have they stated how the overpayment occurred as that is not an insignificant amount ?

You could argue that you will pay it back over the period it was paid - 12 years.  You could also argue that anything paid over 6 years ago is statute barred from recovery.

But as also stated elsewhere they should come to a reasonable agreement of a reduction in future payments, likely over the same length of time as the error existed so that it isn't too great a hardship for the recipient.  

But that might cause significant hardship.  No only would the OP be repaying £3,000 per year but, I would assume, his future pension payments will also be £3k a year lower.  Potentially the OP could see his income reduce by £6k per year.   

I have contacted Veterans UK and asked them why my pension was calculated incorrectly. The person who did this calculation is out of office for over a week and the person who I spoke to said he would try and work out what happened, and call me. Nothing heard yet.
He said they were all overwhelmed by the McCloud Remedy applications. Funny how they found the time to 'review' my pension though. 
The 'significant hardship' aspect is difficult to define or justify, I have a house and a modest lifestyle. I cant see how I can claim hardship when there's people in the Middle East being bombed, shot etc.and pensioners struggling with heating their homes for example.
Will just have to wait out.  (contacted Equinity, takes them up to 3 weeks to do the calculations and offer me payment options, they must be using abacus's!)

daveyjp

If they were wrong once how do you know they are now correct?  You need both calculations to explain how the error was generated and ensure the new figure is the right one.

CedricsDad

daveyjp said:

If they were wrong once how do you know they are now correct?  You need both calculations to explain how the error was generated and ensure the new figure is the right one.

agree totally, will be (almost) interesting to see how they derive the figures...and I do wonder if anyone else has the same issue....

MEM62

CedricsDad said:

MEM62 said:

Brie said:

molerat said:

Do you have to pay it back - it is not yours so yes

but

Can you appeal - yes

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-problems/dealing-with-mistakes-and-overpayments-with-your-pension

Have they stated how the overpayment occurred as that is not an insignificant amount ?

You could argue that you will pay it back over the period it was paid - 12 years.  You could also argue that anything paid over 6 years ago is statute barred from recovery.

But as also stated elsewhere they should come to a reasonable agreement of a reduction in future payments, likely over the same length of time as the error existed so that it isn't too great a hardship for the recipient.  

But that might cause significant hardship.  No only would the OP be repaying £3,000 per year but, I would assume, his future pension payments will also be £3k a year lower.  Potentially the OP could see his income reduce by £6k per year.   

The 'significant hardship' aspect is difficult to define or justify, I have a house and a modest lifestyle.

It could be argued that. for anyone living on a pension, a £6k reduction in their income will cause a degree of hardship. 

CedricsDad said:

MEM62 said:

Brie said:

molerat said:

Do you have to pay it back - it is not yours so yes

but

Can you appeal - yes

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-problems/dealing-with-mistakes-and-overpayments-with-your-pension

Have they stated how the overpayment occurred as that is not an insignificant amount ?

You could argue that you will pay it back over the period it was paid - 12 years.  You could also argue that anything paid over 6 years ago is statute barred from recovery.

But as also stated elsewhere they should come to a reasonable agreement of a reduction in future payments, likely over the same length of time as the error existed so that it isn't too great a hardship for the recipient.  

But that might cause significant hardship.  No only would the OP be repaying £3,000 per year but, I would assume, his future pension payments will also be £3k a year lower.  Potentially the OP could see his income reduce by £6k per year.   

I cant see how I can claim hardship when there's people in the Middle East being bombed, shot etc.

Fortunately, we are not living in the Middle East and 'hardship' will not be defined in the light of or compared to those events.  
 

CedricsDad

Final update:
Received a letter from Paymaster requesting just under £18000.  No explanation/breakdown of how this figure is calculated (ie impact of tax etc) or option to reduce pension to pay this gradually over time.
I really can't be bothered (after numerous phone calls with little response) to chase this for clarification so I've paid it - and will move on with my life.
Thanks to all the contributors, much appreciated.

BikingBud

@CedricsDad

Did you try the Forces Pension Society? £18k is a lot to part without getting a second, informed, opinion.