UK - Letters have been sent to 11,700 retired UK teachers warning that their pensions will be reduced to correct a previous overpayment by the scheme.

An accounting error first came to light in December 2008, when the government announced that 95,000 individuals from the five schemes had been overpaid. (See earlier IPE story: Thousands face pension cut following Xafinity blunder)

The latest group affected brings the total number of former teachers who have received GMP overpayments to 32,000 and, on average, each pensioner was overpaid by £1,017 (€1,171).

The mistake, made by HM Revenue & Customs, occurred when GMP ‘upratings' were applied twice - once under the teachers' occupational scheme, and once under the state pension rules - as in some cases information was inaccurate and calculations were made once a year rather than to reflect the correct entitlement.

The problem dates back to 1978 when public service schemes contracted out of the State Earnings-Related Pensions Scheme (SERPS) on condition that members were guaranteed a minimum amount of occupational pension.

Four other public sector schemes - covering civil servants, soldiers, judges and NHS workers - are also affected. Around 5% of the two million people drawing pensions from the schemes have been overpaid, the longest overpayment dating from 1980.

The letters sent to retired teachers do not say how much each individual will have to repay, but the pensioners will get three months' notice of the amounts involved.

The cost of the overpayments has been written off by the government and Capita will be writing to affected pensioners by the end of this month advising of the change in their pensions.

Although the adjustment is just to put pensioners back on the sum they should have been paid originally, a spokesman for the Department for Children, Schools and Families said the notional repayments by retired teachers could be as much as £100 per month.

However, he said: "In some cases the drop will be less than the pension increase that they received from April 2009, meaning that they won't actually see a cash reduction in payments."

The total overpayment to the end of July this year, across all five schemes, is estimated to stand at £46.8m.

The Teachers Pension Scheme is currently administered by Capita, while earlier schemes with administrative problems were administered by Zafinity.

A statement issued by Xafinity last December said ministerial statements confirmed the error was not caused by administrators but because they had not been given the correct national insurance records information to be able to calculate the GMP.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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