'Unreserved apology' on pensions blunder

More than 1,000 veterans or widows have been affected

The minister responsible for army pensions has given an "unreserved apology" for the error which deprived hundreds of retired disabled soldiers of millions of pounds worth of payments.

These people have paid tax when there is no need and that is wrong and we have a duty to rectify it and recompense them

Lewis Moonie
Defence minister

Lewis Moonie told the House of Commons the total cost of repayment was an estimated £30m.

"The error is deeply regrettable as is the time it took to identify it," he told MPs.

The mistake means the Ministry of Defence faces making pay-outs of about £60,000 to some pensioners.

Mr Moonie said the MoD believed it had now identified most of the people affected.

"These people have paid tax when there is no need and that is wrong and we have a duty to rectify it and recompense them."

He said the MoD had introduced changes in the way pensions were administered that would make it extremely unlikely that such an error could happen again.

"This error is deeply regretted and I look forward to informing the house when all cases have been satisfactorily settled," Mr Moonie said.

Wrongly deducted

Mr Moonie also paid tribute to Royal Artillery Major John Perry, who waged a four year campaign for compensation.

Major Perry deserves to be commended as it was his efforts and persistence which brought the errors to light

Lewis Moonie

"Major Perry deserves to be commended as it was his efforts and persistence which brought the errors to light," he told MPs.

Mr Moonie said the MoD was still trying to contact widows who might have been underpaid.

The blunder occurred because officials in the Army, unlike their Navy and RAF counterparts, did not realise disability pensions awarded to wounded soldiers and their widows for the past 50 years should have been tax-free.

The little grey suits at the Ministry of Defence just wanted to save money

Major John Perry

The mistake led to tax being wrongly deducted from the payments and surviving veterans who were affected are now being reimbursed.

The MoD said it had examined the files of more than 23,000 former soldiers and in 1,003 cases pensions had been underpaid.

Major Perry told BBC Radio 4's Today programme he had first realised the error in 1990 but his concerns had repeatedly been rejected by the MoD.

MoD apology

"I know myself there was a cover-up but there is no way I could prove it in a court of law," said the Army veteran.

He blamed the delay in admitting the error on a cover-up by officials.

"The little grey suits at the Ministry of Defence just wanted to save money," he said.

"They didn't want to damage their promotion prospects by admitting something was wrong."

It is a magic day for John Perry to see the beginning of the end of his campaign and I'm am sure he must feel very proud

Air Commodore Phil Wilkinson,
Forces Pensions Society

A spokeswoman for the MoD said: "The Ministry of Defence accepts full responsibility for the error. We've put a huge amount of effort into rectifying our error.

"We apologise that this has happened. For the individuals we are very sorry."

Failure

Under the 1952 Income and Corporation Taxes Act, pensions were made tax free if they were granted on account of medical unfitness "attributable" to naval, military or air force service.

Civil servants managing Army pensions failed to take this into account and continued to deduct tax from payments to injured veterans from most of the major conflicts since World War II.

Moonie says the MoD is putting things right

The files of those affected have been passed onto the Inland Revenue to be reimbursed and some have already had the money paid back.

Air Commodore Phil Wilkinson from the Forces Pensions Society said Major Perry had fought against quite considerable odds.

"It is a magic day for John Perry to see the beginning of the end of his campaign and I'm sure he must feel very proud," he told the BBC's One O'Clock News.

He said concerned veterans should look at their pension documents to see the telephone number of the war pensions agency dealing with them or contact the Army Pensions Office in Glasgow.

Army veterans can contact the Army Pensions Office on 01412487890