Scheme not entitled to recover overpayments where widower wrongly assured pension would continue on remarriage

The Pensions Ombudsman (TPO) has held that the Teachers’ Pension Scheme is not entitled to recover pension overpayments of almost £33,000 which occurred as a result of a widower’s pension continuing when the scheme rules provided for it to cease on remarriage.  

The member, Mrs E, died in 2008.  Her widower, Mr E, was informed by Teachers’ Pensions (TP) that he was entitled to a widower’s pension.  The letter from TP did not mention what would happen if Mr E remarried.   In January 2011 Mr E e-mailed TP and asked whether his widower’s pension would continue if he remarried.  TP wrongly informed him that the scheme rules provided that his widower’s pension would continue.  Mr E remarried in May 2015 and his widower’s pension continued to be paid.  The overpayment came to light in 2019 after TP asked Mr E to complete a declaration to verify his continued entitlement to a pension.

To bring a successful “change of position” defence to an overpayment claim, the beneficiary must generally show that they received the payments in good faith, that their circumstances have changed as a result of the overpayment in a way that cannot readily be reversed, and that there is a causal link between the overpayment and the change of position.

TPO accepted that the conditions for a change of position defence were met in Mr E’s case.  TPO accepted that that Mr E had received newsletters from TP advising people receiving dependants’ pensions to notify TP if they remarried.  However, the newsletters did not spell out the circumstances in which a dependant’s pension would cease.  TPO considered that the specific response received by Mr E to his question about remarriage “trumped” the more general statements in the newsletters, meaning that Mr E satisfied the good faith test.  The evidence presented to TPO showed that Mr E and his wife lived within their means and that their total savings were significantly below the total amount of the overpayment.  TPO therefore accepted that, but for the overpayment, Mr E would not have spent at the level he did, and that the conditions for a successful change of position defence were satisfied.

Our thoughts

The question of whether a beneficiary received overpayments in good faith is a common issue in overpayments cases.  This case is notable in that TPO considered that the scheme administrator’s response to the pensioner’s specific query “trumped” the generic information provided later in general newsletters.  In this case the complainant accepted that TP was right to stop future pension payments (apart from his GMP).  His complaint only related to past overpayments.