Overpayment fault

Dixiebells1

I was paid out by a local government for death of my cousin from his pension. It took over two years to pay it out. I’ve now had it over four months and they’ve written ‘requesting’ me to return nearly £4k as they realised they’ve overpaid me. Now the sticky part, firstly, I’ve spent it, secondly I don’t have it anymore. Thirdly, it’s a request not an order, do I have to give it back? I mean legally? Can I stand my ground and say no?? I would need to get a loan out and that’s unfair! 

Thanks in advance. 

Penguin_

Someone will be along soon regarding the legalities of the situation but you can always ask if you can set up a payment plan to repay the balance owed. 

Robin9

Is this part of the West Midlands Pension Fund debacle ?   Chaos reigns.

DullGreyGuy

Unfortunately "finders keepers, losers weepers" isnt enshrined in English law

As long as they can substantiate that you weren't entitled to the money they can demand its return. Given the error was made by them they should be reasonable about how it's repaid, eg allow you to repay it in instalments. 

If the reverse was true, and it was discovered they'd underpaid you would you be having the same attitude or demanding that they give you the shortfall?

Hoenir

People make mistakes while at work. That's a fact of life. No reason for people to benefit unfairly. Agree a suitable repayment plan, Than let a legal process add to the amount to be repaid. 

Silvertabby

Yes, you will have to repay it, even if it means paying instalments 

Did your cousin have any closer relations?  It sounds like another, more eligible, claimant may have popped up.

Albermarle

Silvertabby said:

Yes, you will have to repay it, even if it means paying instalments 

Did your cousin have any closer relations?  It sounds like another, more eligible, claimant may have popped up.

I always understood that with a DB scheme, they would normally only payout to a spouse/civil partner/dependent children. 
So a bit surprised to see a cousin getting the pension, but obviously it does happen with the LGPS.

DRS1

Albermarle said:

Silvertabby said:

Yes, you will have to repay it, even if it means paying instalments 

Did your cousin have any closer relations?  It sounds like another, more eligible, claimant may have popped up.

I always understood that with a DB scheme, they would normally only payout to a spouse/civil partner/dependent children. 
So a bit surprised to see a cousin getting the pension, but obviously it does happen with the LGPS.

Sounds more like a lump sum payment than a pension,

Silvertabby

Albermarle said:

Silvertabby said:

Yes, you will have to repay it, even if it means paying instalments 

Did your cousin have any closer relations?  It sounds like another, more eligible, claimant may have popped up.

I always understood that with a DB scheme, they would normally only payout to a spouse/civil partner/dependent children. 
So a bit surprised to see a cousin getting the pension, but obviously it does happen with the LGPS.

Yes, it can.  In the absence of an expressions of wish form, any one-off lump sum death benefit is paid to spouse/children/parent/sibling.....then, with cousins, it starts to get messy.

If OP had been nominated on EOW form, then we wouldn't be having this conversation, so can only guess that the LGPS concerned had to dig for eligible family  members.  And that someone higher up has now appeared.

Happens more often than you'd think.

Brie

Given that it has taken them over 2 years to pay anything out following the death I would be expecting a minimum of 2 years to repay it.  So at most £150 a month.  If that's not affordable tell them what you can pay.  If it's £50 that you can afford they can't expect you to pay more.  And you shouldn't be out of pocket paying interest due to their error.

You might consider talking to one of the debt charities to help you devise a suitable payment plan.  Stepchange and NationalDebtline are the best known but there's also Community Money Advice (CMA), Christians Against Poverty (CAP) or even Citizen's Advice.  Don't use an agency that's going to charge you in any way.  The debt advisers in any of the charities mentioned will help you draw up a financial statement that will show how much excess you have available to make payments back.  And using one of them will make the creditor know you're serious about handling this properly.

Marcon

Dixiebells1 said:

I was paid out by a local government for death of my cousin from his pension. It took over two years to pay it out. I’ve now had it over four months and they’ve written ‘requesting’ me to return nearly £4k as they realised they’ve overpaid me. Now the sticky part, firstly, I’ve spent it, secondly I don’t have it anymore. Thirdly, it’s a request not an order, do I have to give it back? I mean legally? Can I stand my ground and say no?? I would need to get a loan out and that’s unfair! 

Thanks in advance. 

It's not always quite as black and white as everyone else seems to think. Here's what the Pensions Ombudsman has to say about overpayments from a pension provider (same applies to lump sums), copied a minute ago from https://www.pensions-ombudsman.org.uk/faqs:

Your pension provider can only pay you the benefits that you are entitled to under the rules of the pension scheme, and the provider has a duty to try to recover the overpayment.

If you believed the benefits you were being paid were correct and spent money or made financial decisions on the basis of receiving that level of benefits, which you would not have made otherwise, you may have grounds to argue that you should not have to repay some or all of the money that has already been paid to you.

However, you must be able to show that you changed your financial position based on the amounts paid to you, or that the pension provider made a clear statement that you relied on. It is also very important to be able to show that any change you made to your financial position or reliance on statements was reasonable.

If you have been made aware by your pension provider that they have been overpaying your benefits, you should also take any steps you can to reduce your financial loss. For example, if you had booked a holiday which you would not have booked if you knew that you were receiving the overpayments, and it is possible to cancel it, you should do so.

If the overpayments have been made to you for a long time, there might be some of the money the provider cannot recover because too much time has passed, but this will depend on the exact circumstances of the overpayments.

If you think you should not have to repay the overpayments, or that a repayment plan proposed by your pension provider will put you in financial hardship, you should raise this with your pension provider. If you are unsatisfied with their response, please complete our application and send us all relevant paperwork.