Principal Civil Service Pension Scheme · CAS-33474-K7Y1

CAS-33474-K7Y1

Ombudsman’s Determination Applicant Mr R

Scheme Principal Civil Service Pension Scheme (the Scheme)

Respondent MyCSP

Outcome

Complaint summary

Background information, including submissions from the parties and timeline of events.

“Capita is responsible for administering the Principal Civil Service Pension Scheme on behalf of the Cabinet Office.

We have made an initial check of our records and it appears that you may be entitled to benefits from our scheme, although at this stage we cannot make any guarantee. To enable us to further investigate your entitlement you are invited to contact us. An application form can be obtained by completing the request at the foot of the page and returning the letter to the address below.”

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“I DECLARE that I am entitled to payment of my preserved pension in respect of my employment covered by the Civil Service pension scheme and I certify that the information given on this form is correct and completed to the best of my knowledge and belief.

I have read the Notes for Pensioners and I understand that any overpayment of the benefits may be recovered and that I am responsible for notifying Capita of any change of circumstances, which might affect my entitlement.”

• He had received total net payments of £9,846.62 in error. It had included a breakdown of the overpayment.

• Payments could not be made from the Scheme other than in accordance with the regulations (the Regulations) that govern it.

2 CAS-33474-K7Y1 • It required him to repay the total amount of £9,846.62 that he had received in error.

• If he was unable to repay the full amount, he should contact it to discuss repayment options. It was prepared to consider any financial hardship that repayment may cause him.

• It was required to recover the overpayment as Mr R had received benefits to which he was not entitled.

• He could contact it to discuss repayment options if he was unable to pay the full amount.

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• HM Treasury’s ‘Managing Public Money’ guidelines (the Guidelines) include guidance on the recovery of overpayments.

• It was unable to ascertain why Capita had contacted Mr R in March 2014. It may have been part of a member tracing exercise. It may also have been due to Capita administering benefits on behalf of an employer that Mr R had previously worked for.

• The March Letter clearly stated that the benefits were payable from the Scheme and that there was no guarantee that Mr R would be entitled to any benefits.

• The records MyCSP inherited from Capita made no reference to the telephone call that Mr R said he made to Capita around the time he was sent the Form.

• Mr R completed the Form within a week of receiving it. If he had concerns regarding his entitlement to benefits from the Scheme, he could have conducted further research. For example, he could have contacted his former employer or checked historical payslips for details of contributions deducted from his pay in respect of the Scheme. If he could not recall receiving correspondence concerning preserved benefits held in the Scheme, then the need for additional checks was particularly relevant.

• Mr R provided his NI number when he completed the Form. The LTA Statement, that he was subsequently sent, showed a different NI number. So, it was unable to conclude that he accepted the benefits in good faith and that he had a defence against recovery of the overpayment.

• The lack of evidence that Mr R accepted the benefits in good faith meant that it could not be held responsible for the loss of any benefits he would otherwise have received from the Department of Work and Pensions (the DWP).

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• It was possible that Capita was using a tracing service to try to locate a former Scheme member with similar details to Mr R’s and the tracing service provided Mr R’s address in error.

• It agreed with MyCSP’s view that Mr R could not demonstrate good faith. He had accepted the benefits knowing that he was not entitled to them as he had never worked for the Civil Service.

• Mr R could contact the DWP to find out how he could claim any benefits that he may have been eligible to receive.

• If Mr R owned a property, a charge could be put against it to claim the overpayment from his estate on his death.

Mr R made the following additional submissions:-

• He had been in receipt of tax credits; he would have received more had he not been paid benefits from the Scheme.

• He would like MyCSP to admit that it is at fault and contribute towards the repayment of the overpayment.

• He questions why MyCSP did not investigate further when he advised that the NI number shown on its correspondence was not his.

Adjudicator’s Opinion

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• Mr R was paid benefits from the Scheme that he was not entitled to receive. So, there was no dispute that a problem had occurred and that this had resulted in an overpayment of £9,846.62.

• Before the Adjudicator considered whether Mr R had any other legal defences available to the recovery of the overpaid benefits, he considered whether the Limitation Act 1980 (the Act) applied in this case. The Adjudicator explained that the Act can prevent the recovery of an overpayment made more than six years before the claimant, in this case MyCSP, took formal action to recover it.

• The date that formal action was taken by MyCSP was the date it provided TPO with its formal response to the complaint. The formal response was provided on 15 January 2020. The first overpayment occurred in April 2014. So, the Act did not provide Mr R with a defence to recovery because MyCSP made its claim within six years of the date of each overpayment.

• The most common defence against recovery of an overpayment is referred to as “change of position”. That is, the recipient has changed their position such that it would be unjust to require them to repay the overpayment; either in whole or in part. Change of position is a defence to a claim in unjust enrichment. The recipient must be able to show on the balance of probabilities that:

o their circumstances have changed detrimentally;

o the change of circumstances was caused by receipt of the overpayment; and

o they are not disqualified from relying on the defence.

• The Adjudicator explained that a change of position defence is not available to an individual who did not act in good faith when changing their position.

• To meet the good faith test, Mr R must not have had actual knowledge of the overpayment. The good faith test would not be considered as having been met if the recipient of the overpaid benefits had doubts over their entitlement to the benefits. In other words, the recipient was aware that they might not be entitled to a pension, but then failed to make enquiries of the scheme before spending the money (The Adjudicator explained that this is often referred to as having “Nelsonian knowledge”). The Adjudicator also explained that this includes situations where someone might suspect that there was something amiss and could have taken simple steps to ascertain the correct position but did not do so. In other words, the recipient of an overpayment cannot turn a blind eye.

6 CAS-33474-K7Y1 • Mr R had explained that he telephoned Capita at the time to highlight that he had not been employed in the Civil Service. However, he was told that the benefits related to his service in the Territorial Army.

• Unfortunately, no record of this telephone conversation was passed to MyCSP by Capita. So, the Adjudicator could not be sure exactly what was said by Mr R and also what responses were provided by Capita.

• In the Adjudicator’s opinion, Mr R had an opportunity to seek clarity from Capita regarding his entitlement before he returned the Form. Particularly given that, by returning the Form, he was declaring that he was entitled to the benefits it had offered him in the Scheme. For example, he could have written to Capita and asked for details of the employment to which the benefits related. If he had requested information such as the name of the employer, and the period of his pensionable service, it would have been clear to him that he was not entitled to any benefits from the Scheme.

• Furthermore, Mr R had received no documentation suggesting that he had benefits in the Scheme. For example, an annual benefit statement or a preserved benefit statement. Consequently, he would not have been expecting to be informed that he was entitled to benefits.

• The Adjudicator noted that, in May 2015, Mr R raised further concerns regarding his eligibility for benefits from the Scheme, after noticing that a letter from MyCSP quoted a different NI number. The Adjudicator also noted that Mr R maintained that he telephoned MyCSP at the time and that he said he was told he was entitled to those benefits.

• Unfortunately, MyCSP did not have a recording or transcript of the telephone conversation. The Adjudicator highlighted that the Note only referred to the part of the telephone call during which the error in Mr R’s NI number was discussed. No record was held by MyCSP of the conversation concerning the fact that he had not been employed in the Civil Service, or the response provided by the call handler. Without knowing what was said by both parties at the time, the Adjudicator said he could not consider the Note as being sufficient evidence that Mr R had adequately questioned his entitlement to the benefits.

• Having considered the evidence, the Adjudicator’s view was that Mr R’s intentions, in claiming the benefits from the Scheme, were honest. However, in the Adjudicator’s opinion, Mr R knew that he may not be entitled to these benefits. So, the good faith test was not satisfied and Mr R did not have a change of position defence to the recovery of any part of the overpayment.

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• The Adjudicator noted that there were three requirements that needed to be satisfied to establish estoppel by representation; namely:

o a clear representation or promise made by the defendant upon which it is reasonably foreseeable that the claimant will act;

o an act on the part of the claimant which was reasonably taken in reliance upon the representation or promise; and

o after the act has been taken, the claimant must be able to show that he/she will suffer detriment if the defendant is not held to the representation or promise.

• The Adjudicator did not consider that Mr R’s acceptance of the benefits he was subsequently paid by the Scheme was reasonable in the circumstances. Mr R had the requisite information to know that he might not be entitled to these benefits. Similarly, because of the knowledge Mr R had at the time, it cannot be argued that there was a common assumption between the parties that Mr R should receive the benefits he was receiving in error. The Adjudicator said that this is necessary to establish a defence of estoppel by convention. Consequently, the Adjudicator did not consider that Mr R had a valid estoppel defence.

• He believed Capita when it informed him that his pension in the Scheme related to his service in the Territorial Army.

8 CAS-33474-K7Y1 • He notified MyCSP that the NI Number it had quoted for him was incorrect. This was a missed opportunity for MyCSP to identify that something was wrong.

• He always believed that he would have to pay the money back. Had MyCSP admitted it was at fault, and waived part of the overpayment, he would have made a payment to the Scheme.

• He has paid tax on the pension he has received from the Scheme.

• It believed that Mr R’s comment that he always felt that he would have to pay the money back supported its position that the good faith test was not met.

• Any tax Mr R paid in respect of the pension he had received from the Scheme had been offset against the amount it was seeking to recover.

Ombudsman’s decision

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Anthony Arter

Pensions Ombudsman 29 November 2022

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