Pension payout by mistake?

neil7462

Just an update about this pension paid to my friend by mistake, they have asked for a payment plan, which we sent back. She could afford £50 a month, and this would take 26 years to pay back.

They are now asking for her income and expenditure for every month so they can consider it.

Any thoughts on what to do next?

Marcon

https://forums.moneysavingexpert.com/discussion/comment/81974561#Comment_81974561

I appreciate the sense of injustice this paragraph of my reply is going to generate given that the lady concerned isn't at fault, but to move this forward to a conclusion, she probably needs to provide the requested information. In particular, if she used a chunk of cash to pay down her mortgage, she needs to explain the impact that has had on her remaining mortgage payments. Are they the same but are now only payable for a shorter term, or have they reduced?

What she doesn't need to provide is a pound by pound breakdown, or an explanation/justification for her expenditure - this is a 'round number' type of exercise, but needs to be done honestly with reasonable figures. If her usual holiday is a weekend at the seaside, claiming she's now budgeting for regular world trips probably isn't going to cut it!

The alternative would be to decline to provide the information and see what the scheme does next. In a situation such as this, given the amount of cash involved and the scope for adverse publicity, it may be that the trustees/employer will either write it off, or press the administrators to make good the loss (I have absolutely no idea what approach any of the parties would take in this instance). Although I can understand the temptation to go this route, the real downside is that it will drag things out and leave your friend in a continued state of distress and anxiety.

Marcon

I was thinking about this overnight, and wondered if you and your friend have taken note of the Pensions Ombudsman's stance, as set out in the link I provided earlier in this thread, especially:

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.

Maybe the next step is to provide the income and expenditure details requested by the scheme, but make it clear that:

• £xxxx of expenditure would not have been incurred had your friend not reasonably believed the funds she received were correctly paid to her
• she has suffered considerable distress and inconvenience, at one point worrying that she would lose her home as a result of the scheme's maladministration, and expects suitable redress
• she is prepared to pay back £50 per month for the next 5 years, that being the maximum she can afford and the amount/timeframe/duration she feels is reasonable under all the circumstances.

DRS1

Is the scheme asking for income and expenditure so they can see what she spent the money on or so they can see what is an affordable repayment plan? I thought it was the latter. Certainly I think you should look at whatever figures you produce (before you send them to the scheme) to see what a third party would make of them - would they say well she can actually afford another £x per month?