The government is recouping overpayments made to civil service pensioners to the tune of £2.7m, with some savers facing a £34,000 clawback.
FTAdviser reported in June that the government is clawing back overpaid pensions from civil servants, after an audit of the public sector pension scheme's former administrators encountered errors.
The latest figures were revealed by Matt Thurstan, chief executive of MyCSP, the current administrator of the Civil Service Pension Scheme, in a letter to Conservative MP Sir Bernard Jenkin, chairman of the Public Administration and Constitutional Affairs committee, earlier this month.
He explained the errors occurred after employers made changes to the data used to calculate pension entitlements which weren’t considered by the pension scheme.
“For some cases, these changes have resulted in a reduction to the member’s pension, giving rise to an overpayment,” Mr Thurstan wrote.
The administrator identified some 2,000 members who have received overpayments, which equates to an average of £1,200 per clawback. However, the largest single overpayment totals £34,000, he said.
Mr Thurstan explained that the administrator and the scheme were “very conscious of the impact that overpayments can have on members”.
In line with the HM Treasury Managing Public Money guidelines, if members can provide evidence of financial hardship then this is considered, and can lead to their debt being written-off in its entirety in extreme cases, he said.
Repayment plans are also arranged for those who are unable to repay the full amount all at once, including the option to offset against future pension payments, he added.
Mr Thurstan also explained the scheme's move away from its previous stance taken in May 2018, when the scheme decided not to recover excess payments made to its 63,800 members of £22m related to contracted out benefits.
He noted that the guaranteed minimum pension cases were related to an industry-wide issue driven by legislation, and that cost effectiveness of recovery must be taken into account.
He said: “The number of these overpayments is considerably lower and they have a significantly higher average amount. It was therefore deemed cost effective to pursue recovery in line with Managing Public Money [guidelines].
“Furthermore, the increased average value of these overpayments meant that any write-off would likely give rise to an ‘unauthorised payment’, attracting a further tax liability of up to 55 per cent for the scheme. This was not the case for the GMP related overpayments.”
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