The Liberal Democrat spokesman for work and pensions has written to government departments urging them not to recoup overpayments related to public sector workers.
The prospect of dedicated public sector workers losing some of their pension because of mistakes made by the government is “disgraceful”, said MP Stephen Lloyd.
FTAdviser reported last week (25 April) that tens of thousands of public sector pensioners who used the contracting out process could face demands to give back part of their pension, due to discrepancies were found in the records in 2016, which lead to suggestions people may have received erroneous state pension payments.
Until now, only the Civil Service Pension Scheme (CSPS), with 662,000 pensioners, has decided not to recover excess payments made to its members of £22m.
There are five pension funds with members that could be receiving overpayments: NHS Pension Scheme, Teacher’s Pension Scheme, Civil Service Pension Scheme, Local Government Pension Scheme, and Armed Forces Pension Scheme.
Between 1978 and 1997, employers sponsoring defined benefit (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.
DB pension schemes have until October 2018 to check their records against the ones held by HM Revenue & Customs (HMRC), and correct them appropriately.
Mr Lloyd has written to the secretaries of state for health, education, and housing and local government to urge them not to clawback the pension over payments.
He said: “Just last week, with the latest economic growth figures, we have seen another example of this government’s incompetence.
“I think clawing back the pension overpayments would be this government profiting from its past failures, both in terms of how the overpayments were made in the first place, and now with the economy weakening.”
The situation in the public sector is similar to what is happening in the private schemes, where as many as 43,600 pensioners could have to give back up to £50,000 already received from their company pensions.
maria.espadinha@ft.com
