Jacqui D
12-16-2008, 03:24 PM
Tens of thousands face pension cut next year in £126million overpayment blunderBy James Chapman
Last updated at 2:51 PM on 16th December 2008
Tens of thousands of retired public sector workers will see their income drop by hundreds of pounds from next year because of a pensions blunder, ministers admitted today.
The revelation sparked immediate calls for Prime Minister Gordon Brown to intervene in the fiasco to soften the blow on pensioners' budgets.
Nearly 100,000 retired teachers, nurses, doctors, judges, military personnel and civil servants were either over or underpaid their pension.
The over payments are in some cases believed to have run to thousands of pounds. They affect occupational pensions not the State pension.
One report suggests the average overpayment over the 30-year period is about £1,300 per person. In total, they are said to amount to about £126 million.
Concern: Lib Dem economic spokesman was tipped off about the blunder. Chancellor Alistair Darling said some pensions would be 'readjusted'
The decision will prompt calls for a major inquiry into how so much taxpayers' money came to be written off.
Matthew Elliott, of the TaxPayers' Alliance, said: 'A staggering amount has been wasted in this fiasco.
'Public sector pensions have long been a black hole for public money, but to learn that already gold-plated packages have cost the man on the street even more due to incompetent administration is a disgrace.
'The whole system needs to be reformed immediately and there must be serious consequences for those responsible.'
There was already growing concern over the cost of the generous packages enjoyed by 5.2million state employees, which critics say represents an unsustainable financial timebomb.
Thousands of former civil servants may have been overpaid due to the blunder, meaning they face substantial cuts to their pension
The overpayments blunder was revealed in the Commons today by Liberal Democrat Vince Cable, to the fury of Ministers who had planned a statement tomorrow.
Speaking during a debate on the Queen's Speech, he said he had been tipped off several days ago about a firm called Xafinity Paymaster, which pays out pensions to former members of the armed services and NHS.
Mr Cable said he had been told the firm had been 'paying out excessive public pensions to hundreds of thousands of public sector pensioners and that this error had just been discovered and the company were about to start retrieving the money from the pensioners'.
He said the error had been confirmed to him by the head of the civil service, adding 'he asked me not to publicise it for several days in order to give the Government an opportunity to inform the pensioners personally of their difficulties, which they've now done.
Mr Cable asked Chancellor Alistair Darling: 'How many people are we talking about, how much money is involved, what steps are going to be taken to retrieve the overpayments - which I understand in some cases go back decades and are potentially enormous.'
Vince Cable was tipped off by Xafinity
He added: 'I hope none of us can face the possibility of large numbers of ex-servicemen suddenly being faced with bailiffs asking them to repay.'
Mr Darling said there would be no demands for repayments, but the mistakes would have to be put right from next year.
The Cabinet Office will release a statement on the overpayments. Letters are being sent to pensioners explaining how they will be affected.
Chancellor Alistair Darling has said the money need not be repaid but thousands still face having their pensions cut from April next year.
It is understood about 5 per cent of retired public sector workers, from all over the UK, are involved.
Similar problems and controversy have dogged the tax credit system since its inception in 2003.
The main problem has been massive overpayment of credits, which HM Revenue & Customs can demand to be paid back.
There is mounting resentment that private sector workers must pay ever more in tax to finance generous public sector schemes. At the same time, their own final salary schemes are being scrapped or scaled back as recession bites.
Almost 90 per cent of state employees receive final salary pensions, compared to just 16 per cent of workers in the private sector.
Through taxes, private sector workers pay 91p into public sector pension schemes for every £1 they save for their own retirement.
Experts have warned that future public sector pension packages will create a black hole of more than £1trillion in Treasury finances - £40,000 for every household in the country.
The Treasury says the true total liability will be just over half that figure.
Today business leaders joined calls for an independent commission into the 'ballooning' tax bill for public sector pensions.
The CBI said the public sector retirement age should be increased and employee contributions raised.
David Cameron has signalled that a Tory government would seek to end the growing 'pensions apartheid' by reining in schemes offered to new public sector workers.
Lets hope this problem may be rectified without any pay back system, we will have to see what the government have in hand for this problem, just another blunder in a long list of many by those who hold the purse strings!
Last updated at 2:51 PM on 16th December 2008
Tens of thousands of retired public sector workers will see their income drop by hundreds of pounds from next year because of a pensions blunder, ministers admitted today.
The revelation sparked immediate calls for Prime Minister Gordon Brown to intervene in the fiasco to soften the blow on pensioners' budgets.
Nearly 100,000 retired teachers, nurses, doctors, judges, military personnel and civil servants were either over or underpaid their pension.
The over payments are in some cases believed to have run to thousands of pounds. They affect occupational pensions not the State pension.
One report suggests the average overpayment over the 30-year period is about £1,300 per person. In total, they are said to amount to about £126 million.
Concern: Lib Dem economic spokesman was tipped off about the blunder. Chancellor Alistair Darling said some pensions would be 'readjusted'
The decision will prompt calls for a major inquiry into how so much taxpayers' money came to be written off.
Matthew Elliott, of the TaxPayers' Alliance, said: 'A staggering amount has been wasted in this fiasco.
'Public sector pensions have long been a black hole for public money, but to learn that already gold-plated packages have cost the man on the street even more due to incompetent administration is a disgrace.
'The whole system needs to be reformed immediately and there must be serious consequences for those responsible.'
There was already growing concern over the cost of the generous packages enjoyed by 5.2million state employees, which critics say represents an unsustainable financial timebomb.
Thousands of former civil servants may have been overpaid due to the blunder, meaning they face substantial cuts to their pension
The overpayments blunder was revealed in the Commons today by Liberal Democrat Vince Cable, to the fury of Ministers who had planned a statement tomorrow.
Speaking during a debate on the Queen's Speech, he said he had been tipped off several days ago about a firm called Xafinity Paymaster, which pays out pensions to former members of the armed services and NHS.
Mr Cable said he had been told the firm had been 'paying out excessive public pensions to hundreds of thousands of public sector pensioners and that this error had just been discovered and the company were about to start retrieving the money from the pensioners'.
He said the error had been confirmed to him by the head of the civil service, adding 'he asked me not to publicise it for several days in order to give the Government an opportunity to inform the pensioners personally of their difficulties, which they've now done.
Mr Cable asked Chancellor Alistair Darling: 'How many people are we talking about, how much money is involved, what steps are going to be taken to retrieve the overpayments - which I understand in some cases go back decades and are potentially enormous.'
Vince Cable was tipped off by Xafinity
He added: 'I hope none of us can face the possibility of large numbers of ex-servicemen suddenly being faced with bailiffs asking them to repay.'
Mr Darling said there would be no demands for repayments, but the mistakes would have to be put right from next year.
The Cabinet Office will release a statement on the overpayments. Letters are being sent to pensioners explaining how they will be affected.
Chancellor Alistair Darling has said the money need not be repaid but thousands still face having their pensions cut from April next year.
It is understood about 5 per cent of retired public sector workers, from all over the UK, are involved.
Similar problems and controversy have dogged the tax credit system since its inception in 2003.
The main problem has been massive overpayment of credits, which HM Revenue & Customs can demand to be paid back.
There is mounting resentment that private sector workers must pay ever more in tax to finance generous public sector schemes. At the same time, their own final salary schemes are being scrapped or scaled back as recession bites.
Almost 90 per cent of state employees receive final salary pensions, compared to just 16 per cent of workers in the private sector.
Through taxes, private sector workers pay 91p into public sector pension schemes for every £1 they save for their own retirement.
Experts have warned that future public sector pension packages will create a black hole of more than £1trillion in Treasury finances - £40,000 for every household in the country.
The Treasury says the true total liability will be just over half that figure.
Today business leaders joined calls for an independent commission into the 'ballooning' tax bill for public sector pensions.
The CBI said the public sector retirement age should be increased and employee contributions raised.
David Cameron has signalled that a Tory government would seek to end the growing 'pensions apartheid' by reining in schemes offered to new public sector workers.
Lets hope this problem may be rectified without any pay back system, we will have to see what the government have in hand for this problem, just another blunder in a long list of many by those who hold the purse strings!