The Pensions Ombudsman has rejected a complaint from an individual who was asked to repay benefits totalling almost £10,000 which he had received despite never having been a member of the scheme in question (Mr R CAS-33474-K7Y1).
This update covers the legal position in England and Wales.
The Ombudsman found that Mr R had "Nelsonian knowledge", ie he was aware that he might not be entitled to the pension, but had turned a blind eye to this rather than making further enquiries. This meant that he was not able to bring a "change of position" defence to the repayment claim.
In 2014 Mr R had received a letter from the then scheme administrator of the Principal Civil Service Pension Scheme which said that it appeared that Mr R might be entitled to benefits from the Scheme. Mr R said that he had telephoned the scheme administrator to advise that he had not worked for the Civil Service, but that he had been in the Territorial Army. According to Mr R, the scheme administrator told him that "that would be it". Mr R subsequently signed a declaration in which he confirmed that he was entitled to a pension in respect of his employment covered by the Civil Service pension scheme. The form also confirmed that he understood that any repayment might be recovered. Mr R was then paid a lump sum of approximately £4500 and started to receive an annual pension of approximately £1500 (as well as arrears backdated to 2013).
Later in 2014 a new administrator took over responsibility for the Scheme. Mr R noticed that a letter from the new administrator quoted a NI number that was not his. He telephoned the scheme administrator and was asked to provide evidence of his correct NI number. Mr R said that in that call he also told the new administrator that he had not worked for the Civil Service and had been in the Territorial Army. He said he was told that he was entitled to the benefits he was being paid from the Scheme. Mr R subsequently provided the administrator with details of his correct NI number.
In 2018 Mr R received a letter from the scheme administrator informing him that he was not entitled to any benefits from the Scheme and seeking repayment of the benefits received. Mr R said that he would struggle to repay that amount.
The Ombudsman did not agree that Mr R's service in the Territorial Army would have given him the reasonable expectation that he was entitled to benefits from the Scheme. The Ombudsman said that, given that Mr R had not worked in the Civil Service at any time or received any earlier communications regarding the benefits, he should have made enquiries into his eligibility before completing the form. The Ombudsman held that Mr R had had at least "Nelsonian knowledge" that he might not be entitled to the benefits. This meant that the "good faith" test had not been met, so Mr R could not bring a defence against the overpayment based on having changed his position in reliance on the overpayments being correct.
Our thoughts
Members faced with a claim for an overpayment will often seek to bring a "change of position" defence which involves arguing that they have so changed their position in reliance on the payments being correct that it would be inequitable to require them to make repayment. However, a "change of position" defence is only available to an individual who has received payments in good faith. This case illustrates that the Ombudsman will not entertain a change of position defence where he considers that an individual in receipt of benefit payments has turned a blind eye to the possibility that they might not be entitled to the payments.
