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Last Updated: Friday, 10 March 2006, 12:13 GMT
Pension credit clawbacks denied
Stephem Timms
No clawbacks, says the government
The government says it will not require the repayment of 130m in overpaid pension credit.

Thousands of pensioners were overpaid pension credit last year - and a Conservative shadow minister has raised fears they may have to repay the money.

But Pension Reform Minister Stephen Timms told the BBC that the government had written to pensioners, making clear that this was not the case.

Overpayment has more than trebled in three years.

This was revealed in a Parliamentary answer last month, which showed that in 2004/05, overpayment of pension credit was estimated to have risen to 2.1% of the total paid.

David Ruffley, the Conservative shadow minister for welfare reform, said: "The system is too complicated. It is an increase in means testing and had led to a trebling of overpayments since the introduction of the new system."

But Mr Timms denied clawbacks would be enforced.

"When there has been a mistake, a letter goes out. It makes it clear that social security law does not allow us to require repayment," he said.

"But of course if people want to, and are willing to pay that money back, we'll be pleased. But nobody will be forced to pay the money back," he added.

Pension credits

Pension credits were first paid in October 2003 to replace the previous system called the minimum income guarantee (MIG).

The most recent estimates indicate that pension credit has a take-up rate of 68-76%, which means that between 1.6bn and 2.4bn went unclaimed in 2003/04.

For the year to March 2003, the overpayment of MIG to pensioners was estimated at just 50m.

But in the following two years, as pension credits were brought in, this shot up to 100m and then to 130m.

Rules published by the Department for Work and Pensions state that the extra money would only be clawed back where "there was a misrepresentation, or failure to disclose, a material fact" and that there would be no demand for the money if it was overpaid due to official error.

This did not impress David Ruffley.

"This government has form when it comes to being muddled about clawing back benefits," he said.

Tax credits

The problem with pensions credits echoes the much larger problem seen with the system of working and child tax credits.

There has been widespread criticism of the government's aggressive attempts to reclaim overpayment of these.

Government figures have shown that in 2003/04, 1.8 million claimants of tax credits were overpaid.

Last October the Treasury Select Committee estimated this amounted to overpayment of 2.2bn, due to a combination of administrative error, fraud and claimants failing to report changes in income.

Q&A: Pension Credit
23 Sep 05 |  Business

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