The Court of Appeal has confirmed that the Pensions Ombudsman (PO) does not have the power to authorise trustees to make deductions to members' pensions to recover past pension overpayments. 

If the member disputes the amount of overpayment which the Trustee wants to recoup from the member's future pension the Trustee must first get an order from the County Court permitting deduction.

So if the PO determines the amount of an overpayment and that it can be recouped, the Trustee must then make an enforcement application to the County Court before actioning any deduction.  The Court of Appeal said that this is an administrative task. That is right given that PO decisions are final and binding (absent a successful appeal) so the County Court cannot revisit the substance of the dispute. 

In future we expect that the PO will change practice so the wording of PO determinations can be easily enforced by the County Court. In the meantime, we recommend that trustees ask the PO to set out in the determination both the amount of the total overpayment and the amount and frequency of the deductions that the trustee may make.  Unless this happens the enforcement process in the County Court will not be an easy administrative exercise.

No order of the County Court is needed if the member does not dispute the amount of the overpayment and this will be the position in the vast majority of cases.

Addleshaw Goddard LLP acted for the Trustee of the CMG UK Pension Scheme.