Amyas Morse, head of the National Audit Office
(NAO), said today:
"This is a sad case of
public administration failure. Warnings were first sounded
years ago that there were problems but no one took responsibility
for resolving them. It is essential to prevent errors on this
scale from happening again, but this will happen only if one party
takes responsibility for the process as a
whole.”
A review by the National Audit Office of
overpayments to public service pensioners totalling £90 million has
found a complex and fragmented administrative process, prone to
error, and for which there is no clear overall
responsibility. The process requires effective joint working
between the parties involved (the five public service pension
schemes, HM Revenue and Customs (HMRC), and the Pension, Disability
and Carers Service (PDCS)) but they have failed to achieve
this.
The overpayments, and a smaller number of
underpayments, have affected over 90,000 retired soldiers, doctors,
nurses, teachers and civil servants. The errors occurred
because the pension schemes did not have Guaranteed Minimum Pension
information recorded for these members, which meant that the
schemes did not apply correct annual cost of living
increases. The five pension schemes involved plan to
write-off the resulting overpayments, and those pensioners who were
underpaid are now receiving the money to which they were entitled
in previous years.
The errors, which affect six per cent of
pensions being paid to members over state pension age in the five
schemes, occurred over many years. So far, the pension
schemes have identified 85,509 individual overpayments totalling
£90.2 million, and 4,917 underpayments totalling over
£191,000. The pension schemes are still working to resolve
more than 26,000 cases and so these figures are likely to
rise.
Despite the complexity of the administrative processes involved and
the known history of problems – some of the parties involved raised
concerns about the process as far back as the mid 1990s - few
checks and controls were in place, which meant that missing
information on the Guaranteed Minimum Pension went undetected, in
some cases for over 20 years. No one party has taken
responsibility for overseeing the whole process, ensuring it runs
smoothly and resolving errors. The process therefore broke
down in a number of ways.