The Pensions Ombudsman has published a factsheet with the aim to help scheme members understand what happens if they have been overpaid, and is asking pension schemes to share it with affected members.

Overpayment recovery can take members by surprise, although the practice of recouping overpaid pensions over the same length of time as they occurred helps to avoid causing hardship. Nonetheless, members can feel frustrated if their pensions are reduced. 

TPO now hopes its new factsheet will “allow disputes to be resolved at the earliest possible stage”, adding: “We would like schemes to share this information with a member, ideally when informing them of an overpayment, or when a member queries or challenges the scheme’s attempt to reclaim an overpayment, so that members have a better understanding of this complex area.” 

Overpayments happen when a pension scheme pays too much money to a member. TPO highlights that members are only entitled to their correct benefits under the scheme, so overpayments are usually recoverable, while ongoing pension payments are reduced to the correct amount.  

“However, it can be upsetting and confusing for members to be told this, particularly if the overpayments happened through no fault of their own. TPO receives many complaints on this topic that are often very complex to resolve,” the ombudsman said. 

The factsheet aims to help members understand: 

 

TPO hopes this information “supports both parties to work together to agree whether, how and over what period an overpayment should be recovered. In turn, this should allow the parties to resolve the issue without the need to come to TPO, and any complaints we do receive should be more straightforward to resolve.”