More than 2,000 ex-civil servants have received pension overpayments that they may now have to pay back, with the biggest bill reaching £34,000, the pensions administrator has revealed.
The scale of the overpayments, which were first uncovered in a CSW investigation this summer, was revealed for the first time as Matt Thurstan, chief executive of civil service pensions administrator MyCSP, admitted the company had overpaid “just over 2,000” scheme members over the last 15 years. The overpayments totalled £2.7m – an average of £1,200 per person.
The numbers, revealed in a letter to Public Administration and Constitutional Affairs Committee chair Sir Bernard Jenkin, are the first official figures to be published about the overpayments, which were MyCSP is now attemping to claw back following a major review of civil service pensions ordered by the Cabinet Office in 2016.
The count has risen by more than 50% since the scandal came to light this summer, when it was estimated around 1,200 people had been overpaid.
Jenkin wrote to MyCSP demanding answers after CSW reported that retired officials had been sent letters telling them to return large sums of money years after retiring. In many cases they were not told why they had been repaid, but further enquiries revealed a litany of separate errors in the information given to MyCSP when people retired, including mistakes in calculating overtime payments and missing pay data.
In the letter, Thurstan admitted that on many occasions, MyCSP had failed to recalculate pension payments after scheme employers – which include government departments – had provided the administrator with updated figures. He said MyCSP had calculated pension entitlements correctly based on the data employers provided at the time of retirement, but changes to the data provided later “were not being acted upon in every case”.
“This meant that a number of pensions, which should have been revised, had not been,” he said.
The letter, which was dated 24 July but has just been published, was copied to John Manzoni, civil service chief executive and permanent secretary to the Cabinet Office.
It comes ahead of a meeting between the Cabinet Office and civil service trade unions tomorrow to discuss matters including the overpayments. The FDA and PCS unions have urged the Cabinet Office to write them off, saying the people affected had no way of knowing they were being overpaid.
Jenkin had asked MyCSP to explain why it was demanding that people pay back the money, when around £22m in pensions overpayments arising from a separate error had been written off earlier this year.
The Cabinet Office announced in March that it would write off overpayments made to some 36,000 pensioners because of a seperate error calculating part of people’s pension entitlement, known as the Guaranteed Minimum Pension.
Thurstan said there were “a number of reasons” why the incidents were being treated differently. One such reason was that the pension revisions leading to the most repayment demands were “business as usual administration processes”, while the GMP error was an “industry-wide issue driven by legislation”.
He also said the decision over whether to recover the overpayments was made according to the Treasury’s guidance on managing public money.
“The number of these overpayments is considerably lower and they have a significantly higher average amount. It was therefore deemed cost effective to pursue recovery in line with Managing Public Money,” he said.
He also said scheme members who had been overpaid may be liable for an extra tax bill if their overpayments were written off, because the write-off may be considered an “unauthorised payment” by HM Revenue and Customs. This was not the case for GMP-related overpayments, he said.
Thurstan said that following the 2016 review, MyCSP had updated its processes to ensure pensions were revised quickly when employers provided updated pay data. “I can assure you that following the process improvements we introduced in May 2017, there have been no subsequent delays to cases where revisions are required,” he said.