Pension scheme trustees can face difficulties when trying to recover past pensions overpayments from members, a lawyer has said.

Stephenson Harwood pensions partner Graham Wrightson made the comment in light of a recent decision by the Pensions Ombudsman to favour a member when the Pearl Group Staff Pension Scheme overpaid the pension by £3,182.45 over approximately five years.

The Ombudsman accepted the member's, Mrs Wytch, defence that her financial position had changed as a result of the overpayment as she was receiving approximately £50 extra a month.

Wrightson said: "We have always known that it is not possible to recover overpayments where a member has changed his or her financial position in reliance on the incorrect pension being paid but the view has generally been that it is very difficult for a member to argue this defence successfully."

He added: "However, the Ombudsman's decision in favour of Mrs B Wytch (PO-528) seems to extend the scope of this defence to circumstances which, perhaps, might not have been accepted in the past.

"If this decision indicates a shift in approach by the Ombudsman, pension schemes will need to discuss with their administrators what additional steps they should take to ensure that overpayments do not occur in the first place."

Wrightson also said that the fact that the trustees were seeking to recover the overpayment by instalments over a 63 month period did not help their case.

The Ombudsman said that Mrs Wytch should receive a further £300 for the "distress and inconvenience" of being overpaid.

First published 08.05.2013

monique_simpson@wilmington.co.uk