Retired civil servants face pension cuts after MyCSP uncovers overpayments of £22m
Cabinet Office accounts reveal historic overpayments in amounts handed to former public sector employees
Retired civil servants have been overpaid an estimated £22m through their pension schemes, the pension administrator MyCSP has discovered.
The overpayments will be written off in line with procedures for the rest of the public sector, but thousands of ex-officials could see their pension income reduced in future.
Figures released by the Cabinet Office and analysed by the Financial Times revealed miscalculations dating back to between 1978 and 1997, when members of certain schemes were entitled to a guaranteed minimum pension.
MyCSP, a mutual spun out of government in 2012 and overseen by the Cabinet Office, found the errors as part of an exercise to match the data it holds on its members with HM Revenue & Customs records.
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Historic overpayments of £22m were disclosed in the Cabinet Office’s pension plan accounts for 2016-17, which state that they will be “corrected going forward”.
The accounts said: “The review concluded that an estimated £22 million of overpayments have been made; these will not be reclaimed, consistent with the approach across the rest of the public sector.”
The Cabinet Office told the FT: “Work is still ongoing to finalise the number of pension scheme members that have received an overpayment, and will conclude in spring 2019.”
It said that for many members overpayments were less than £100, and therefore the impact on pension amounts payable should, in “most cases, be minimal”.
Garry Graham, deputy general secretary of trade union Prospect, said the decision to write off past overpayments was the correct one.
“The errors were made by the scheme and there was no way members could have been expected to realise they were being overpaid,” he said.
“However the proposed reductions in future pension income will cause real hardship as members’ expectations are based on the level of pension they thought they were entitled to.”
Graham said he was also concerned that similar errors may have been made in private sector schemes, where companies may seek to reclaim past overpayments from members.
“The scale of the overpayments in the civil service pension schemes alone suggests that hundreds of thousands of members might be affected across all schemes,” he said, adding that Prospect would support any of its members facing demands for repayments.
MyCSP administers pensions for around 1.5 million current and former public sector workers, including central government staff.
In its first few years as a mutual it was beset by reports of poor performance and delays in payments to pensioners. A 2016 National Audit Office report detailed the "hardship, distress and inconvenience" faced by scheme members, but said action had by then been taken action to improve service levels.
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