Looks at overpayments to members of public service pensions due to incorrect calculation of Guaranteed Minimum Pensions (GMPs) in 2008 and again in 2018Jump to full report >>
In December 2008 the Government announced incorrect payments had been made affecting some 95,000 (or 5 per cent) members of five public service pension schemes. Overpayments amounting to an estimated £126 million had been made over 30 years. A small number of people had been underpaid. The reason was that Guaranteed Minimum Pension (GMP) entitlement had been incorrectly recorded, with the result that the schemes did not apply correct annual increases.
The UK Government decided not to not recover money already paid to individuals but to correct ongoing payments from April 2009. This meant that “some pensioners would have their payments reduced and others will see increases in their payments in 2009 which are less than the annual inflation uprating.” Those who had been underpaid the arrears in full, with interest. (HC Deb, 16 December 2008, c111-2WS)
The Scottish Government decided to protect current levels of pension for Scottish local government, police and fire pensioners but was unable to do so for members of the teachers and NHS schemes (Scotland Government Press Release, ‘Public pension overpayments’, 16 December 2008).
The NAO published the report of its Review of Errors in Guaranteed Minimum Pension Payments on 16 July 2009. It said that no-one had taken responsibility for overseeing the whole process and that it had therefore broken down in a number of ways:
A GMP reconciliation exercise is currently underway and is expected to end by December 2018. Further overpayments are being identified as part of this. The decision on whether to recover is one for the relevant government department or local authority:
Private sector schemes in which people have accrued GMP rights are also identifying incorrect payments due to the GMP reconciliation exercise.
Commons Briefing papers SN04919
Author: Djuna Thurley