In 2013 the NHS identified than an employee, Mrs S, had been overpaid £31,529 in pensions benefits over 10 years as her state benefits, which would have reduced her NHS benefits, had not been taken into account. The NHS scheme was prepared to write off £16,142 but sought to recover the remaining £15,386.

Mrs S complained that this was unfair as she had relied on the additional income in good faith and could not afford to repay it. In particular, she had entered into a hire purchase agreement in 2006 for a period of five years to purchase a car and the total repayable had been £20,000. She argued that she had been misled by the NHS scheme and would not have entered into the hire purchase agreement had she not been misled.

The Pensions Ombudsman determined that it would be unfair of the scheme to recover the overpayments because:

  • Mrs S had changed her position in good faith
  • There was an unambiguous representation to Mrs S by the scheme
  • It was likely that Mrs S would not have incurred the same expenditure had she not received the overpayment
  • It would be inequitable for the NHS scheme to recover the overpayments

The scheme was ordered to repay any overpayments already recovered, with interest. Mrs S did not receive additional compensation due to the extra money she had already received.

This is a fairly uncommon case of a member being entitled to retain scheme overpayments by meeting the requirements necessary to present successful defences of change of position and estoppel by representation.