UK - A determination by the pensions ombudsman has made life easier for sloppy administrators, law firm Sacker & Partners claims.
The determination followed an unsuccessful complaint brought by A.J. Noble against Biddle Pension & Life Assurance, which withheld his monthly pension payments in order to recover an overpayment.
Lawyers believe this determination gave trustees the green light to withhold payouts to pensioners to recover any overpayments made in error.
But Sacker & Partner solicitor Peter Murphy said that as these overpayments are often made by scheme administrators – which ultimately pay for any unrecovered overpayments – they will be “breathing easier” as a result of the determination.
He added that trustees must treat the determination with caution as it conflicts with section 97 of the Pensions Act, which is widely interpreted as prohibiting the suspension or reduction of a member’s pension to recoup overpayments.
Murphy said: “If the ombudsman’s view is correct, this determination will have an enormous impact upon all pension schemes and the way in which mistaken overpayments are redressed.”
He explained that trustees would no longer be forced to choose between out-of-court proceedings to seek recovery of the overpayments or “writing off” the money.
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