Overpayment – The case study of Mr Y

Mr Y transferred out of the Royal Mail Statutory Pension Scheme (the Scheme) in 1989, however, the respondent continued to send benefit information to him between 1990 and 2010. Based on this, Mr Y decided to retire, and benefits were paid from the Scheme from March 2011.

It was not until September 2017 that the respondent realised that an overpayment had occurred and began steps to recover the overpayment. As part of the complaint process, Mr Y raised a defence under the Limitation Act 1980 (the Act). This would mean that the respondent was limited to the amount it could recover.

The respondent agreed that a limitation defence applied and that it would not seek recovery of any amounts paid before October 2011. It also offered £500 to recognise the distress and inconvenience caused to Mr Y.

Mr Y remained unhappy with the response and the complaint was considered by the Deputy Ombudsman, who partly upheld the complaint. She agreed with the £500 offered by the respondent and that the Act applied. However, she found that the applicable date was not in accordance with the High Court’s interpretation (that the “clock stops” when The Pensions Ombudsman (TPO) receives the respondent’s formal response to the complaint) and therefore the respondent could not recover any amounts paid before 31 January 2012, this being six years before receipt of the formal response. The Deputy Ombudsman found that Mr Y’s complaint failed on the other defences against recovery on the basis that, for various reasons, he failed the “good faith” argument. The respondent was directed to pay the previously offered £500 and to recalculate the overpayment based on payments made after 31 January 2012.  

Related determinations

• Royal Mail Statutory Pension Scheme (PO-27002)