Page last updated at 21:53 GMT, Monday, 15 December 2008

Pension errors 'go back decades'

Vince Cable
Mr Cable said he had been asked not to raise the matter until now

The pensions of tens of thousands of retired NHS, armed services and other public sector staff have been overpaid for decades, the government has said.

About 5% of public sector pensioners are affected by overpayments worth "tens of millions" of pounds.

Earlier Lib Dem MP Vince Cable asked for assurances bailiffs would not be turning up at ex-servicemen's doors.

Chancellor Alistair Darling said the money need not be repaid but pensions would be adjusted from April 2009.

The issue was raised in the Commons earlier by Mr Cable, the Lib Dem Treasury spokesman, who said he was informed about the problem 10 days ago by a BBC Radio Ulster journalist.

'Potentially enormous'

He told MPs he had held off saying anything until Monday at the request of Sir Gus O'Donnell, the head of the civil service, who had asked for time to alert pensioners involved.

But during a Queen's Speech debate, Mr Cable said the journalist had understood that a company, Xafinity Paymaster - a former public body which pays out public sector pensions - had been "paying out excessive public pensions to hundreds of thousands of public sector pensioners".

It will be necessary to adjust what's paid for the future
Chancellor Alistair Darling

The journalist said that the "error had just been discovered and the company were about to start retrieving the money from the pensioners".

Mr Cable asked Mr Darling how many people were involved, how much money was involved and what steps would be taken to retrieve the overpayments, "which I understand in some cases go back decades and are potentially enormous".

Mr Cable added: "I hope none of us can face the possibility of large numbers of ex-servicemen suddenly being faced with bailiffs turning up and asking them to repay overpayments, as we've already discovered in the appalling incidences regarding tax credits."

'Very worrying'

Mr Darling intervened a few moments later, said the money would not have to be repaid but added: "It will be necessary to adjust what's paid for the future."

He added: "It does need to be put right from next year. There will be a statement tomorrow from the Cabinet Office."

Later a Cabinet Office source told the BBC about 5% of public sector workers, from all over the UK, were affected, estimated at tens of thousands of people.

They include retired NHS and armed services personnel and other public sector workers. A letter informing them what has happened, and how it will affect them, will go out on Tuesday.

Scottish National Party work and pensions spokesman John Mason said it looked like "an extremely serious issue".

"Alistair Darling has said that these apparent overpayments will need to be 'put right from next year' and that he will 'adjust what's paid for the future'," he said.

"These comments are very worrying. Pensioners must not lose out. We need to know exactly what has happened and exactly what the UK government plan to do."

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