Defined BenefitJun 7 2019

Hundreds of civil servants face pension clawback

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Hundreds of civil servants face pension clawback

The government is clawing back overpaid pensions from 540 civil servants, after an audit of the public sector pension scheme's former administrators encountered errors.

According to the Civil Service Pension Scheme rules, which has about 662,000 pensioners, any member getting too high a pension must refund overpayments.

MyCSP, the current administrator, has been instructed by the Cabinet Office to liaise with members to identify and recover those overpayments, a spokesperson told FTAdviser.

MyCSP and the Cabinet Office didn’t disclose the figures being recovered, but according to media reports, the clawbacks range between hundreds and thousands of pounds per person.

A Cabinet Office spokesperson said: "We recognise the inconvenience this will cause some former employees, but we are obliged to recover overpayments where it will be of benefit to the taxpayer to do so.

"We must ensure pensioners are paid their entitlement. Over 90 per cent of those impacted will see an increase to their pensions - and we offer a number of repayment options to those who have been overpaid."

The audit in question considered all members whose pensions were paid through three different administrators, both in-house and outsourced, and was part of a substantial review of the quality of member data, MyCSP stated.

The audit focused on 305,000 members whose pensions potentially needed adjusting, as a result of additional information received from their employer after they retired and pension benefits were in payment, the administrator added.

The data analysis also identified 12,000-plus pensioners who will receive a higher pension as a result of extra information received from their employers after their retirement, it noted.

The government has taken a different stance in the past regarding civil servants' pension overpayments. In May 2018, the scheme decided not to recover excess payments made to its 63,800 members of £22m related to contracting out benefits.

Workers union Prospect stated it will be lobbying the Cabinet Office to intervene in this matter.

Pensions officer Neil Walsh told FTAdviser the union "will support all members affected by this in making a complaint through the scheme’s internal dispute process".

He added: "It is distressing for pensioners to be told that their main source of income will be cut and that the scheme wants to recover past overpayments as well.

"The members are not to blame for these mistakes, they relied on the administrators to pay the correct amount in good faith. Many of them will have a strong case for arguing that repayment is not appropriate.

"Instead of prolonging the distress and engaging in a difficult and labour intensive recovery process, the civil service pension scheme should follow its own precedent from previous exercises and write off the past overpayments."