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.