Overpaid public sector pensioners will face cuts

Ministers are being called upon to explain how thousands of retired public sector workers face a cut in their pensions after a huge overpayments blunder.

Liberal Democrat Treasury spokseman Vince Cable raised the issue in the House of Commons yesterday after receiving a tip-off that Xafinity, which delivers about 5% of public sector pensions, has been overpaying some pensioners for years.

Ex-military personnel and NHS staff are among those caughtaffected, although the government has confirmed that repayments were "not going to happen".

Chancellor Alistair Darling said yesterday: "It will be necessary to adjust what's paid for the future. It does need to be put right from next year."

The Cabinet Office is expected to release a statement this morning.