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Govt to review blunder which saw £126m overpaid to public sector pensioners

Minister for the Cabinet Office Liam Byrne has confirmed that £126m has been overpaid to 95,000 public sector pensioners since 1978 in a large scale administrative blunder.

In a statement released today, Byrne says he has called on the National Audit office to review the “end-to-end process to pin-point accountabilities”.

He says in 5 per cent of cases national insurance information was incorrectly recorded resulting in overpayments. The five public sector schemes affected include the NHS and the armed forces.

Byrne confirms pensioners will not be made to pay back the excess money but says payments will be put right from April next year, which will see many pensioners incomes reduced.

The letter states: “The advice of the Accounting Officers of the five schemes is that it is unlikely to be cost-effective to attempt recovery of these monies from individuals. Correct pension payments will be ordered immediately from April 2009.”

The Government has written to the pensioners involved informing them of the mistake.

Conservative shadow chief secretary to the Treasury Philip Hammond says: “Today’s statement leaves several important questions unanswered. We need to know how these errors went unidentified for so long, why they occurred, what ministers knew and when, and – most importantly – how many people will see their pensions reduced and by how much.

“It is completely unacceptable for the Government just to tell pensioners they have been affected but refuse to give them the full facts until January. 95,000 people will now face a Christmas of uncertainty and fear, wondering what is going to happen to their pensions.”

Liberal Democrat Shadow Chancellor Vince Cable says the figures highlight decades of incompetence.

He says: “Ministers apparently knew about this in March but completely failed to come clean. The Government must not claw back any money from the workers affected. Pensioners should not have to pay the price for Government error. Ministers must ensure that any claims already made are withdrawn. The Government must confirm whether local government, fire and police pensions have been affected, as they have been in Scotland.

“There must be an immediate investigation to find out if there are problems with any other pension payment contractors and establish whether the Government or private contractors are responsible. If there are big reductions to pensions when the changes are introduced in April, ministers should look at ways of staggering the new rates, while ensuring that in the end people are paid no more and no less than the pension they are entitled to.”

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