Bereaved families asked to return pension overpayments

The UK's Department for Work and Pensions (DWP) has recently been exposed for pursuing relatives of deceased individuals for incorrectly paid state pensions. While the DWP admits it has no legal right to recover the funds, it argues that the move is to protect public money.

Sir Steve Webb, the former pensions minister, stated that the letters sent to families by the department did not explicitly state that repayment was voluntary. Over the past five years, the DWP has mistakenly paid out over £500 million in state pensions and pension credits to deceased individuals, recovering approximately half of the funds from the relatives of the deceased. This situation typically arises due to delayed reporting of deaths or processing delays by the DWP, leading to additional pension payments.

In the most recent year, the DWP overpaid £144 million in state pensions after someone's death due to reporting delays. The department recovered £67.3 million, leaving £76.7 million in overpayments unrecovered. Sir Steve Webb obtained copies of the letters the DWP sent to families and executors through a Freedom of Information request, revealing that the department requested the return of funds to protect public money but did not specify that repayment was voluntary.

Sir Steve Webb stated that he was "appalled" that the letters did not make it clear that refunds were not mandatory. He believes this has turned pension repayments into a "lottery," with some people returning the money while others do not. He also warned that the system disproportionately affects the most vulnerable, who may be grieving and unable to challenge the letter. He called for a "consistent approach," urging the government to either obtain a legal basis for recovering overpayments or stop profiting from "people who don't understand how the system works."

A Radio 4 Money Box listener named Dennis said he had been "caught by this process" twice after his parents died. Dennis explained that he "dealt with all his parents' affairs" as instructed in the letters. He also added that he "obeyed the government and would pay" because he was unaware that repayment was not a legal requirement. Another Money Box listener, Jane, told the BBC that her late husband would have been "absolutely furious" if he had known his £250+ pension had been returned when it didn't need to be. Jane said she was confused when she received the letter from the DWP stating her husband had been overpaid, as she had notified them "immediately" after his death. She stated: "The way it happened and the whole process was upsetting."

The UK's Department for Work and Pensions said in a statement: "We have no intention of causing distress, but we have a responsibility to taxpayers to recover overpayments. We recognise this is not always possible. While there is no legal obligation to repay these debts, we recognise that some people will want to repay money they were not entitled to. We provide full contact details and encourage anyone with concerns to call us."