UK - Trustees have been given the green light to withhold payouts to pensioners to recover any overpayments.
The ombudsman’s landmark decision follows a complaint brought by A. J. Noble after Biddle Pension & Life Assurance withheld his monthly pension payments in order to recover an overpayment.
Nobel claimed Biddle was in breach of the Pensions Act.
Ombudsman David Laverick was sympathetic but did not uphold the complaint.
Laverick said: “While the overpayment was an unfortunate occurrence, it remains that Mr Noble has received his pension entitlement for some time to come.
“It is not now a matter of the trustees withholding his pension payments, rather that – in the absence of the overpayment being repaid – those payments have already been made.”
Linklaters pensions litigation partner Mark Blyth said: ”It is not an uncommon occurrence for trustees to discover that people have been overpaid benefits.
“Prior to this determination there was a general view that you would have to sue the member for repayment. And that on discovering the overpayment trustees would just reduce the pension to the correct level.
“Now you can claim back the over payment by offsetting it with future payments.”
He added that the action of suing members to retrieve overpayments often cost more than the money reclaimed.
Around 6% of pensions ombudsman cases involve either the incorrect or non-payment of benefits.
It is expected that this determination will cut out many of these claims and speed up the ombudsman’s determination process.
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