The difficulties pension scheme trustees can face when attempting to recover past overpayments of pensions from members has again been highlighted, after a member of the trust based occupational pension scheme, Pearl Group Staff Pension Scheme, was overpaid a total amount of around £3,000.

Stephenson Harwood’s pension partner Graham Wrightson cited the case of scheme member Barbara Wytch who had been overpaid in pension payments from the time it commenced for a period of just over five years. The total amount of the overpayment was £3,182.45 or approximately £50 a month.

However, as a result of the overpayments her financial situation changed and when she decided to bring her pension into payment, she reduced her working hours, her husband decided to retire and she chose to give £3,000 to her son for a deposit on a house.

Wytch’s complaint about the trustees’ intention to recover pension overpayments was upheld against the trustees as she would not have made changes to her lifestyle if she had not received the extra payment.

Wrightson stated: “We have always known that it is not possible to recover overpayments where a member has changed his or her financial position in reliance on the incorrect pension being paid but the view has generally been that it is very difficult for a member to argue this defence successfully. Indeed, we have seen many attempts to do so being rejected by the Ombudsman.

“However, the Ombudsman’s decision in favour of Mrs Wytch seems to extend the scope of this defence to circumstances which, perhaps, might not have been accepted in the past. If this decision indicates a shift in approach by the Ombudsman, pension schemes will need to discuss with their administrators.

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