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Former pensions minister Sir Steve Webb has hit out at the Department for Work and Pensions (DWP) over letters sent to grieving families asking them to return overpaid pension payments without making it clear that repayment is optional.
Sir Steve revealed that the DWP has inadvertently paid out over £500 million in state pension and pension credit payments to accounts of deceased persons in a five-year span, managing to recoup about half of that amount.
While these overpayments following a person’s death aren’t legally enforceable, the DWP attempts to reclaim funds as voluntary repayments, citing a duty to the taxpayers. “It’s not a blunder, it’s just a feature of the system,” Sir Steve said.
He explained, “The question is, what should happen then? And the bit that struck me as odd is that DWP try to get the money back, but don’t have a legal right to insist.”
Sir Steve, currently a partner at pension consultancy LCP (Lane Clark and Peacock), has raised concerns after submitting a freedom of information request to secure a copy of the letter sent out to reclaim overpayments. “Nowhere does it say that this is voluntary,” he pointed out.
The letter includes an FAQ section, but fails to ask “Do I have to do this?”, which Sir Steve highlighted as problematic. He expressed his worry: “And the result, I fear, is that it’s a lottery, and the losers of the lottery are people who are intimidated or frightened or upset by a letter. “You know, they’ve just been bereaved.
“They get a letter from the Government demanding hundreds of pounds back, and they just send it because they think they have to. They don’t want, you know, they perhaps fear a knock at the door kind of thing, whereas other people, who perhaps are aware they don’t have to pay it back or just choose not to, don’t.”
Sir Steve argued that there should be clarity in the law, stating either everyone must repay the money or the Government should cease requesting repayments. “This kind of halfway house of … we know that it’s not mandatory when we send the letters, but we’re not going to tell you … that doesn’t seem right to me.”
The Department for Work and Pensions (DWP) has admitted that there is no compulsory legal duty to repay overpaid funds but insists on its role to try to recoup the money. A spokesperson from the DWP remarked: “It is not our intention to cause distress, however, we have a responsibility to taxpayers to recover overpayments. We acknowledge this is not always possible.”
They further noted: “Whilst there is no legal obligation to repay a debt of this type, we recognise some people will be willing to repay money to which there was no entitlement. We provide full contact details and encourage anyone with concerns to call us.”
The DWP has explained it does not send additional payment requests if no acknowledgement is received after the initial contact and attempts to reclaim the funds are typically made through the bank involved in the transaction or from the deceased’s immediate family.
