Royal Mail pensioner told to return overpaid pension despite

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Royal Mail pensioner told to return overpaid pension despite maladministration

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The Pensions Ombudsman (PO) has ordered a deferred member of the Royal Mail Pension Plan to return an overpayment of £2,152 resulting from an administrative error.

Deputy PO Jane Irvine (pictured) accepted that the scheme's administrator the Pensions Service Centre (PSC) failed to alert the complainant Steve Hudson to the overpayment in a timely manner.

But she determined that he would have made the same level of purchases if he had been paid the correct tax-free lump sum of £35,615 from the plan, which had the best funding level of any FTSE 100 scheme in 2014.

Hudson was paid out £37,705 by the PSC after he requested early access to his benefits from his 50th birthday in November 2007, as well as an additional payment of £791 for indexation in 2008.

He also received an actuarially reduced annual pension of £5,112 to reflect the fact that he was withdrawing his pot before his normal retirement date.
The PSC did not bring the overpayment to Hudson's attention until April 2011, at which point he argued that it should be written off especially as he had undergone a "change of position".

While the administrator agreed he could not have reasonably known about the overpayment, it proposed a ten-year repayment plan of £21.73 per month after awarding him compensation of £275 for three counts of maladministration and the "distress and inconvenience" caused.
But he rejected the administrator's offer, arguing that his financial position had deteriorated over time due to issues including a pay freeze in 2009, the increased cost of living, higher pension contributions, and less disposable income.

The complainant also sought the help of The Pensions Advisory Service (TPAS) and said he would not have spent £10,277 on home improvements if he had known about the error.

Irvine has instructed Hudson to provide details of his income and expenditure in order to establish whether the ten-year repayment plan will cause him "undue financial hardship".

The recovery plan will be adjusted if the defence can be proven, but the original plan will go ahead if he fails to provide the requested information to the PSC.
Irvine said: "Having found that there was maladministration on the part of PSC, I must consider whether this has resulted in injustice to Mr Hudson.
"I do not find that he has suffered any financial loss as a direct result of the error by PSC. However, I do find that he has been caused distress and inconvenience. Therefore I uphold his complaint against PSC."