Overpaid final salary pension - what do we do?

[BaconMacon]

Hi guys

Someone in my family just received a letter saying that their final salary pension has been overpaid. It says they want to reduce their pension to the correct level going forwards (which is okay), but also “recoup” the historic overpayments by reducing their future pension payments until it’s been repaid. I don’t think that’s fair - what do we do?

Really grateful for any advice.

It's annoying but it's not unfair. They've received money they aren't entitled to, by mistake - of course they can't keep it.

Get the new calculations double checked and agree an affordable timescale for repayments.

Trustees have an obligation to get the money back. But what you can do is negotiate on how much is deducted. If your Mum is elderly and this is her. Only income and the deductions will have a significant impact on her then offer say 10p a month.

How long has it been overpaid for? If a long time and she has set her lie up to rely on that amount then she should push back - but you need evidence.

I work in pensions.

It is correct that they can recoup the overpayment. And tbh it’s fair enough. If you are overpaid at work then you expect to repay it.

Sometimes Trustees can decide to waiver the overpayment and not claim it back but that is at their discretion and depends on the overall funding level of the scheme. If the scheme is running on a deficit then they’ll want to reclaim the overpayment. If the scheme is much healthier and in surplus they may choose not to claim back.