Pension scheme members are only entitled to those benefits that are provided under the rules of the scheme, so when a member receives more than that and is overpaid, the scheme must consider whether to recover the payments before providing all future pension instalments are calculated correctly.
Where a claim is made to recover a pension that has been overpaid by mistake, it must be put forward within six years of the date a person could, with reasonable diligence, have discovered the mistake. 
Can a member refuse to repay?
A case of a member of the Teachers Pension Scheme who took early retirement and was the re-employed as a teacher a few years later, was recently considered by the High Court.  The provisions of the Scheme required members that return to work in this way to provide information on an annual basis, so that it could calculate whether to reduce or ‘abate’ the pension. The purpose is to ensure that the salary from a member’s new employment, plus their pension, does not exceed the salary – adjusted for inflation – held in their last employment.
The member in question in the above case did not provide information about a salary increase once they’d returned to work, which triggered abatement provisions, resulting in the member being over paid. Accordingly, various documents regarding the abatement rules were sent but the member argued that they shouldn’t have to repay the money since they had ‘changed position’ by becoming reliant on the overpayment through one-off and repeated expenditure. They also stated that no more than six years’ overpayments could be claimed back.
The High Court’s ruling
The Court held that the member must have been aware of the possibility that they were being overpaid due to the correspondence sent out and that they should have highlighted this to the Scheme. This made the ‘change of position’ defence unavailable.
On the other hand, it also found that the Scheme could, with reasonable diligence, have discovered that the overpayments were being made a lot earlier than it had done. The Court believed the Scheme to have had all of the information it needed to realise that an abatement would be required if the member continued his employment in the 2002/2003 tax year. Consequently, the Scheme could not recover overpayments made more than six years before the date when the limitation period was deemed as having stopped. In this case, this cut-off date was held to be when the member first brought his complaint to the Ombudsman.
Lessons to takeaway
It’s clear form the High Court’s judgment that a member cannot rely on a ‘change of position’ when it is clear that they have turned a blind eye to overpayments, rather than it being a genuine oversight. The case also highlights how schemes have a responsibility to keep track of, and act on, the information available to them to spot if any overpayments are being made. If it fails to spot such an occurrence, or fails to take steps to recover overpayments until much later down the line, it risks the limitation period running out and not being able to recover these in full.
 Section 32 of the Limitation Act 1980
 Norman Charles Webber v Department for Education  EWHC 4240 (Ch)
For further information, please contact:
Stephen Maynard, Scheme Manager, Entrust
T: 0161 836 7792