In a recent determination by the Pensions Ombudsman (PO), pension overpayments were brought to consideration along with the various contributing factors for seeking their repayment.


The facts of the matter concerned a Mrs Barrow who for a period of time was entitled to a widow’s pension from the Principal Civil Service Pension Scheme (PCSPS) paid for by the administrator, their paying agent. Mrs Barrow was in receipt of this pension from 31 March 2005 to 22 October 2012 however after she remarried on 27 January 2008 and informed the administrator of her change in circumstances she was not in fact entitled to continue receiving a payment. When the administrator realised their error in 2012, they informed her that she had been incorrectly in receipt of the widow’s pension and asked her to repay £12,024.88. Mrs Barrow disputed this request by way of appeal however the administrator rejected this under the IDRP. The stage two IDRP (made by the Cabinet Office’s Scheme Management Executive (SME)) noted that the literature provided to Mrs Barrow stated that the widow’s pension would only potentially stop on any remarriage and stated that she only ought to repay one third of the overpayments, with the administrator paying the balance to the Scheme. The administrator however continued to demand that Mrs Barrow repay the full sum.

Mrs Barrow made a further appeal and as evidence of her defence against recovery, submitted the following details:

  • Salary - following her husband’s death in 2005, Mrs Barrow reduced her working hours and salary to £26,367.28pa.  In 2010, she made two requests to reduce her working hours, the first in April 2010 (£19,177pa) and again in September 2010 (£16,864pa). Mrs Barrow submitted that she had not made a request to increase her working hours as her employer was not at that time accepting requests due to the uncertainty of the organisation’s future;
  • Mortgage - Mrs Barrow stated that prior to moving in 2009 her previous property was mortgage free.  Initially, her new mortgage payments were £915.02 per month, but by 2012, these had reduced to £714.66 per month; and
  • Car loan and travel to work - Mrs Barrow stated that following the move her journey to work increased from 5 miles per day to 24 miles.  As a result, the decision was made to change to a more fuel efficient car and in order to cover this cost, a loan was taken out (with a start date of 8 December 2009).  The loan was for four years at £112.81 per month.

The administrator continued to state that there was no defence against the recovery - they argued that this was the case because the pension should never have been received following her remarriage. Mrs Barrow agreed as part of her complaint that following her remarriage she was not entitled to such a benefit and she did not dispute that the money had to be repaid.  However, her complaint was that she should not have to repay her third of the overpayment on the grounds that she had changed her financial position based on the receipt of the pension in good faith. 


The PO allowed Mrs Barrow’s defences to succeed and upheld the complaint against the administrator because Mrs Barrow had relied on the overpayment to change her position to the extent that it was not equitable to require her to repay the money. He stated that the administrator was guilty of maladministration, having incorrectly maintained that there was no defence against recovery in any circumstances, and, ignored the SME’s binding stage two decision. The PO believed that the administrator “effectively tried to bully Mrs Barrow into repaying the money without understanding what her case was for not doing so.”  The PO awarded her £500 compensation for the distress and inconvenience caused and stated that it was for the administrator to repay the full £12,024.88 to the Scheme.

If a person is in receipt of monies paid by a mistake, the payer is legally entitled to seek recovery of that overpayment.  However, in doing so, they must also take into account any arguments against recovery of the said overpayment.  Following this PO determination, it is clear that a strict approach will be taken against companies who attempt to recover pension overpayments.