By Paul Lewis
BBC Radio 4's Money Box
Talks have been held between the government and the Post Office after an error which affected 190,000 pension payments.
The accounts are run for the Post Office by the US bank J P Morgan
The blunder led to 25,000 people receiving double payments, with the rest suffering long delays when the new electronic system was turned off for several hours.
The affected pensioners were people who had switched from the old system of order books - which are being phased out - to the new Post Office Card Account.
The error is deeply embarrassing for the government, which plans to move all pension and benefit payments over to the new system, known as "Direct Payment".
DWP Minister Chris Pond told the BBC's Money Box programme:
"It is quite unacceptable that pensioners were left in this position. I have had an apology from the Post Office and I have had an urgent discussion with the chief executive [on Friday]."
Money Box has learned that UK pension payments pass through the US Bank JPMorgan. A clerk in New York noticed the double payments and turned the system off.
The mistake affected payments on Monday, 23 August, between 1200 and 1530 BST.
Mr Pond said it should not have happened:
"This was not a computer failure. Someone made a decision to turn it off. They are not allowed to do that. They must check first with the Post Office and they did not check, either with the Post Office or the Department for Work and Pensions. This was a management error."
Mr Pond also revealed that contingency arrangements also failed that day:
"If the whole system is taken down then the Pension Service is going to be unable to cope with the flood of calls.
"There are arrangements in place that the Post Office can pay £20 emergency payments but that system itself broke down.
"In my discussions with the chief executive I made it very clear that their contingency arrangements are not acceptable. We need to ensure it never happens again."
Sally West, Income Policy Officer at Age Concern agreed:
"It just not acceptable, people hanging around worrying about whether they are going to get the money that is due to them."
And she continued: "A lot of older people who live on very low incomes budget very carefully and manage on a week-to-week basis, so it would not be uncommon - when people go along to get their pension book - to be virtually out of money, and a day could mean a day without being able to go shopping and get the food you need."
The winners may be the 25,000 pensioners who were paid twice. Mr Pond said:
"We do not expect the Post Office or its suppliers to be pursuing pensioners for this money.
"Many will wish to pay it back. They will recognise it is an error. What we are saying to Post Office Limited and its suppliers is we do not want our customers approached in any way which is intimidating to get this money."
Meanwhile, Post Office spokesman Mark Douglas told the programme:
"We have talked with the minister and understand what he has requested for the future.
"We will be working with our suppliers to meet his request so that we can avoid any similar problems happening again."
Mr Douglas confirmed that further top level talks between the Department for Work and Pensions and The Post Office will take place on Monday.
BBC Radio 4's Money Box was broadcast on Saturday, 4 September, 2004 at 1204 BST.
The programme was repeated on Sunday, 5 September, 2004 at 2102 BST.