Bereaved relatives ‘misled’ into repaying state pensions

[dutchman]

Families receive ‘upsetting’ demanding letters after civil servants’ overpayment blunders



Bereaved families are being “misled” by blundering civil servants into reimbursing pension payments wrongly sent to their dead relatives.

The Department for Work and Pensions (DWP) has mistakenly overpaid £512m in state pension and pension credit to deceased people in the past five years, official figures show.

There is no legal obligation for families to repay the money. However, the DWP does not mention the voluntary nature of any repayments when it writes to bereaved families demanding the sums.

Sir Steve Webb, a former pensions minister and now a partner at consultancy LCP, said the lack of clarity turned repayment into a “lottery” that disproportionately affects the most vulnerable, who may be grieving and less capable of questioning the request.

The DWP letter, obtained by Sir Steve and seen by The Telegraph, is sent out to bereaved family members and executors.

It begins by apologising for getting in touch “at this difficult time”, before explaining that incorrect payments after death can be made “for a number of reasons” and are “not anyone’s fault”.

The letter then states: “We hope you will appreciate that when public funds are incorrectly paid we are obliged to ask for them to be refunded.”

The possible ways to pay are then listed, including the “recommend[ed]” method of using an enclosed “bank giro credit slip”.

Sir Steve said he was “shocked” to learn the letter did not make it clear that the repayments were optional. He added: “For many people dealing with the loss of a loved one, a letter from the Government asking for money for overpaid pension will come as a nasty shock.

“But what people may not realise is that there is no legal obligation to refund this money to the Government.

“If DWP must write these letters they should make it much clearer that repayment is voluntary so that recipients can make an informed choice”.

The letter is sent from the DWP’s “Debt Centre Corby”. One widow who contacted Sir Steve said she was “very upset” after receiving the letter from the debt management office when she and her late husband had never been in debt in their lives.

Pension credit is paid in advance to people on the old state pension, but in arrears to those on the new system. The state pension itself is always paid in arrears. However, the DWP has overpaid £512m in state pension and pension credit to people who have died since 2019-20, with a record £159m sent last year alone.

The issue can occur if there is a delay in reporting a death – or in the DWP processing the information.

Rachel Vahey, of AJ Bell, said the complexity of making state pension payments to around 13 million people meant some overpayments were “bound to slip through the net”.

She added: “This puts the DWP in a tricky position. [It] has had to develop ways of communicating with families which make clear that overpayments have been made but are sensitive to the situation and that repayment for some can be difficult.

“However, it is clearly a problem if communications do not outline that repayment is voluntary as the DWP could be misleading families already suffering with a loss.

“It is vital that those affected are made aware in a sensitive way that outlines exactly the rules around repayment.”