The Cabinet Office is planning to commission a government review of how civil service pensions are managed and administered, after it emerged that some 12,000 retired civil servants have been paid too much or too little, CSW has learned.
CSW reported last week that retired civil servants have received demands for hundreds, and in some cases thousands, of pounds after they were paid too much by the pensions administrator MyCSP.
Some 12,000 pensions have been revised, based on the results of an internal audit by MyCSP of around 300,000 cases that began in 2016. More than 90% of people affected will see their pensions increase, having been underpaid to date.
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The remaining people affected – up to 1,200 – are having their pensions cut and many are receiving demands to repay large sums of cash that they have erroneously received, some over several years. MyCSP has issued hundreds of letters demanding payment, and is expected to continue sending out letters until the end of June.
The Cabinet Office is now preparing to commission the Government Internal Audit Office to review the processes in place to ensure civil servants receive the correct amount in pension benefits after they retire.
The review will aim to determine whether existing processes are robust and will be fit for purpose in future. The Cabinet Office declined to comment further on the timeline or scope of the review.
Letters seen by CSW said the overpayments were identified after MyCSP received “further information” from pensioners’ former employers that showed a decrease in their pensionable earnings.
At the time of publication, neither the Cabinet Office nor MyCSP had been able to say what this new information was.
It is understood that the majority of affected pensions are being changed because of information that emerged after civil servants had retired, such as backdated pay awards that led to pensions rising in line with retrospective pay increase.
However, this does not explain why a person’s pension would be decreased after they had retired, and the Cabinet Office has confirmed the revaluations are seperate from the Guaranteed Minimum Pension miscalculation had led to overpayments worth £22m earlier this year.
None of the former civil servants CSW spoke to were able to identify how their overpayment had happened or how it been calculated. "My first thought was that my manager had done something wrong, because that was the impression that it gives," Lynne Gates, who is facing a repayment demand for more than £700, said.
Civil servants who have been underpaid to date are being paid the amount they are entitled to under the scheme rules. These rules have no provision for interest to be paid on the sum they have been underpaid, even if it dates back several years.
Since CSW's first revealed the repayments last week, several more pensioners have come forward, saying they have received demands to pay back up to £9,000 that they had been paid in error. They also detailed cuts to their future benefits of up to £1,000 a year.
Last week, civil service trade unions called on the Cabinet Office to write off the overpayments, as it did for the GMP errors.
Prospect deputy general secretary Garry Graham said there was a “strong argument for these cases to be treated in the same way”.
"It is not good enough for the scheme administrators to just demand repayment when these overpayments were a result of their own error,” he said.
Are you affected by this issue? Have you received a letter with changes your pension? CSW wants to hear from you. Please email beckie.smith@dodsgroup.com