As many as 43,600 pensioners could have to give back up to £50,000 already received from their company pensions as schemes update their contracting out data.
Defined benefit pension schemes have until October 2018 to check their records against the ones being held by HM Revenue & Customs (HMRC), after discrepancies were found in 2016, leading to suggestions people may have received erroneous state pension payments.
The problem is after this reconciliation is finished, up to 1 per cent of defined benefit members with pensions in payment can have material under or over payments, and some schemes are recouping this cash.
With a universe of 10.9 million members in defined benefit pension funds, 40 per cent of these are pensioners in receipt of an income, according to the latest data available from the Pension Protection Fund Purple Book – which means that up to 43,600 individuals could be affected.
According to Maurice Titley, director at data management, systems and administrator firm ITM, it is possible that a member could end up "being overpaid £40,000 to £50,000 across the lifetime of a pension".
When you add up all the cases, in total the amount being overpaid is often greater than the amount being underpaid, he added.
Between 1978 and 1997, employers sponsoring DB pension schemes could contract their employees out of the additional state pension, as long as the scheme paid a comparable guaranteed minimum pension (GMP).
The benefit of contracting out was that both employer and worker had a reduction in their National Insurance contribution.
Sir Steve Webb, director of policy at Royal London and former pensions minister responsible for ending contracting out, said the problem has arisen due to data from 30 or 40 years ago coming from an era where it was submitted manually, and keyed in by somebody else.
Sir Steve said: "If you typed a number of national insurance wrong, or you put a decimal point in the wrong place, and you are doing this for million and millions of people, even a 0.1 error still gives you thousands of people with the wrong numbers."
After several years of allowing schemes to check their data, the taxman established a deadline for this process to be completed.
After this, pension schemes will enter in the rectification phase, which is expected to take around two years.
According to research from the Pensions Administration Standards Association (PASA), which has launched a checklist for trustees that are in the data reconciliation process, 13 per cent of schemes in rectification are recouping the overpayments.
Mr Titley said: "A lot of schemes have fallen back on the fact that you can't particularly blame the members for this. It is a very obscure part of the rules of the pension scheme.
"In extreme cases, it could be an awful lot of money, especially if you have a relatively small pension to start with and a large part of it is made up by the GMPs. It can have a material impact to the member."