Hand put coins to stack of coins

Pension scheme members are only entitled to the benefits which are provided under the rules of the scheme.

When a member receives more than they are entitled to under the scheme rules (ie they have been overpaid), the scheme will need to:

  • provide future pension instalments calculated correctly; and
  • consider whether to recover the overpayments.

Limits to full recovery

Where a claim is made to recover pension which has been overpaid as the result of a mistake the claim must be made within 6 years of the date a person could with reasonable diligence have discovered the mistake.[1] 

 What if a member refuses to make any repayments?

The High Court [2] recently considered the case of a member of the Teachers Pension Scheme (the Scheme) who took early retirement and was then re-employed as a teacher a few years later. The Scheme provisions require members who return to work in this way to provide information on an annual basis so the Scheme can calculate whether to reduce or ‘abate’ the pension. This ensures that the salary from a member’s new employment plus his pension do not exceed the salary (adjusted for inflation) he had in his last employment.

The member did not provide information about his future salary increases which triggered the abatement provisions. As a result the member was overpaid.

He argued that he should not have to repay the overpayments because he had changed his position to his detriment in reliance on the overpayment through one-off and repeated expenditure. The member also argued that no more than six years’ overpayments could be claimed back.


a) Change of position

The member was sent various documents regarding the abatement rules. The Court held that the member must have been aware from reading these that there was a possibility of an overpayment; he should have asked the Scheme about the possibility that he might be overpaid, but he failed to make any enquiries.

As a result a change of position defence was not available.

b) Limitation

The Court also found that the Scheme could, with reasonable diligence, have discovered the overpayment a lot earlier than it had done. The Scheme had all the information it needed to know that an abatement would be required if the member continued in his employment in the 2002/03 tax year. This meant that the Scheme could not recover overpayments made more than 6 years before the date when the limitation period was to be regarded as having stopped (the cut-off date). In this case the cut-off date was held to be when the member first brought his complaint to the Ombudsman.

What can be learned from the case?

A member cannot rely on a change of position defence to recover overpayments where he has turned a ‘blind eye’ to the risk of an overpayment, rather than there being a genuine oversight.

The case also shows that schemes have a responsibility to act on that information where there is sufficient information available to discover that an overpayment has occurred, if a scheme does not identify an overpayment when it first could have done and fails to take steps to recover an overpayment until much later, it risks not being able to recover in full because the limitation period has ran out.

This post was contributed by Rachel Stevens. For more information, email blogs@gateleyuk.com.

[1] Section 32 of the Limitation Act 1980

[2] Norman Charles Webber v Department for Education [2014] EWHC 4240 (Ch)

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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.