Click here if you are affected
by the recent announcement of pension overpayments from public
sector pension schemes.
Receiving
misleading or incorrect information does not normally give a right
to the incorrect benefits that have in error been quoted. The
general principle, is that individuals remain only entitled to
their correct benefits. There may however be an issue if
because of the error you took decisions you would not have done
otherwise. If these decisions mean you are now worse off,
compensation can be considered to make good the actual loss
suffered.
For example, if because you expected a lump sum
of £5,000 you booked a cruise costing £2,000, you may
be entitled to compensation if it were agreed that you only booked
the cruise on the basis you thought you were receiving the higher
figure. Compensation is however limited to the extent you
have made additional expenditure, in this example, to
£2,000. There is however an expectation that if you can
reverse your expenditure, you take steps to try to do so.
Therefore if the cruise can be cancelled, it should be. Your
loss would therefore be reduced, perhaps to the zero or the cost of
the deposit.
If a benefit is in fact overpaid, the recipient
is not normally entitled to keep the overpayment. The payer can ask
for it back. However, if it has been spent, it is possible
that repayment may not be required, if your expenditure is not
reversible.
In trying to resolve disputes about errors, there should be no
suggestion that you were aware, or should have realised you had
received incorrect information or an incorrect payment. If
you should have realised, compensation is not appropriate, and any
overpayment is always recoverable.
Click here to download our leaflet - mistakes and
overpayments.
Q & A's
The general principle, which applies when mistakes happen, is
that individuals are only entitled to their correct benefits, not
to incorrect ones in error quoted to them.
If because of the error you entered into financial contracts,
you would not have otherwise, compensation may be appropriate to
overcome any actual loss you have now suffered.
To contend that because of their error you are now worse off, it
needs to be the case that it was reasonable for you to have assumed
that the incorrect figures were in fact correct. If you should have
been aware the figures were wrong, compensation is not
appropriate.
The fact that a pension provider may have been careless or
negligent does not mean that the incorrect figures should still be
maintained.
'Change of position' means that as a direct result of the
incorrect information you have entered into financial contracts, or
made decisions, you would not have otherwise have done and that
these now cause you to be worse off.
Once an error is identified there is an expectation that an
individual takes all possible steps to reduce their loss.
Therefore, if because of the error you have relied on it to your
financial detriment, it's only irreversible contracts or
expenditure that are taken account of. If a contract can been
reversed, you should try to do so. But if that resulted in a loss
of a deposit, compensation could be sought to recover the cost of
that deposit.
Although the mistake may not have caused you to be worse off,
redress for the distress and inconvenience the error caused can be
made. Where it is considered appropriate, modest compensation
payments are sometimes payable.
Yes. Even if incorrect benefits have been put into payment,
individuals remain only entitled to their correct benefits.
However, the extent to which you have 'changed your position'
should be investigated.
Where there has been an overpayment of benefits, precedent
outlined in the Courts has established the right of the payer to
seek recovery of the overpaid amount. However, it may be possible
that you do not have to repay, if because of the error, you have
'changed your position'.
For a contract to have been formed it is necessary for there to
be offer, acceptance, consideration and the intent to form a legal
relationship.
Consideration in this respect means that both parties have given
up something of equal value to the other. For example, if you have
transferred in benefits from another scheme, you could contend that
you have given up pension rights in that scheme in exchange for a
transfer value that has been used to secure the benefits quoted to
you.
Where the necessary elements can be identified, it may be
possible to show a contract has been formed. It is however often
difficult to identify all the necessary features of a contract.
Defending a request to repay an overpayment is possible if you
have made decisions or entered into financial contracts you would
not have done had you known the correct figures. But if a decision
or contract is reversible, it's expected that steps are taken to
try and do so. If a loss results, i.e. loss of deposit, then this
is an item that could be identified as an actual financial loss,
and compensation could be sought. However, where the decision is
irreversible, for example, where a holiday that has already be
taken, then the recovery can be prevented to the extent of the
value of the expenditure.
Aggressive attempts to recover overpayments can also be
considered as further maladministration. If repayment is required,
its terms should not be such as to cause financial hardship. Your
circumstances should be taken account of and agreement reached
about the period of repayment. It is normally acceptable to allow
an individual the same time period over which the overpayment was
made, to repay.
Where the overpayment has been made for more than 6 years, the
Limitation Act 1980 may further restrict the ability of the
provider to seek its recovery. Generally the limitation period is 6
years from when the mistake is, or should have been,
discovered.
If you are concerned a mistake has been made regarding your
pension rights, we are happy to investigate the relevant issues,
making sure you receive your correct benefits and that any error is
not to your financial detriment.
