We recently highlighted cases where members received letters from Equiniti seeking repayment of pension overpayments that had been made in error. If you receive a letter, please read our guidance before responding. It explains what to check, the steps to take, and how we can support you.
Treasury Policy
The key principles on recovery of overpayments are set out in Managing Public Money.
In summary, public bodies should normally seek to recover money paid in error. Recovery should be proportionate, cost-effective and fair, taking account of the recipient’s circumstances, including official error and whether the mistake could reasonably have been identified. Action should not be delayed unnecessarily, but reasonable repayment plans may be agreed where immediate repayment would cause difficulty. Where recovery is impossible, uneconomic or unjustified, the debt may be written off, but only with proper authorisation and recording. Write-off is the exception, not the rule.
Types of Overpayments
- Pension Sharing on Divorce (PSOD). A review began in 2021–22 to correct around 3,500 historical Pension Sharing Order cases. DWP guidance on the valuation date for court-sealed PSOs had been misinterpreted, meaning some members and former spouses with PSOs since 2004 were paid at the wrong rate. After the exercise, assurance checks found significant calculation errors. SSCL confirmed further corrections were needed, including a full review of arrears cases and further investigation of overpayments. The work is expected to finish in 2026–27.
- Early Departure Payments (EDP). An issue has been identified with some EDP payments that are currently incorrect. This appears to have arisen from a misinterpretation of AFPS 15 rules. Where a member has a break in service of more than five years, earlier service cannot count towards the EDP qualifying point. Two separate cohorts therefore require review.
- National Insurance Adjustment. Assurance checks carried out in 2025 on pensions already in payment identified a systemic issue affecting pension increases at State Pension Age where a member is subject to National Insurance Abatement. At that point, the member’s pension should be reduced by £0.87 for every full year of service before 1980. However, the issue caused pension increases that had already been applied to be applied again, duplicating the increase and inflating the pension. Some members received the incorrect pension for several years before being notified of the error, resulting in significant overpayment recovery action.
- GIP Guaranteed Income Payment (GIP). Routine review procedures identified errors in both the initial calculation of GIP and in the annual uprating of ongoing payment. Next steps in correcting this for both over and underpayments is under review.
Internal Dispute Resolution Procedure (IDRP) Approach
The IDRP is the formal route for raising a complaint about how a pension scheme membership has been managed. Members can use the IDRP to explain the nature of their complaint and set out the outcome they are seeking. An online IDRP form is now available here. For members facing a National Insurance Adjustment overpayment recovery request, we can provide guidance on how to structure the IDRP submission, what information to include, and which focused questions may help support the case.
