Public sector pensions errors date back to 1978

Thousands of retired public sector workers face a cut in their pensions after a huge overpayments blunder dating back 30 years.

Ex-military personnel and NHS staff have been paid a total of £126m more than they should have been since 1978, official figures from the Cabinet Office revealed today.

An estimated 95,000 people will be affected by the mistakes, representing around 5% of the total number of pensioners in those schemes, and most will see cuts to their pension payments from April 2009.

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.

Liam Byrne, the Cabinet Office minister, confirmed today that the government would not seek to reclaim the money it had lost over the years.

“It is unlikely to be cost-effective to attempt recovery of these monies from individuals,” he said.

Chancellor Alistair Darling said yesterday in the Commons: “It will be necessary to adjust what’s paid for the future. It does need to be put right from next year.”

Meanwhile Byrne has asked the National Audit Office to review the pensions process and report back to Parliament.

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