In past editions of this Update we have considered the Ombudsman’s approach to limitation periods and recovery of overpayments. In PO-1918 Mr D (1 September 2017) a scheme found that it had, for twenty years, applied higher increases to a member’s GMP than he was entitled to. The trustees sought to recover the overpayments through recoupment (by making a deduction from his future pension payments for a period of 10 years).

The Ombudsman’s Adjudicator, citing Webber v Department for Education [2016] EWHC 2519 (Ch), held that only overpayments made in the 6 years prior to the administrators’ response to the Ombudsman complaint could be recovered. In response, the trustees argued that the Limitation Act restriction upon recovery, relied on in Webber, was a defence to a claim in respect of a debt, but was not available in respect of equitable recoupment. 

The Ombudsman disagreed, opining that restitutionary claims for unjust enrichment (such as overpayment cases) were generally statute-barred after six years under the Limitation Act, and the start date for these purposes was normally the date on which each overpayment occurred. As such, Webber had “dealt with” relevant limitation periods and the cut-off date for overpayment complaints before him.

Comment: We understand the employer is to appeal this equitable recoupment point to the High Court, potentially introducing a new angle to this important limitation issue. If that appeal is successful, trustees will have to apply different limitation periods depending on how they seek to recover overpayments.