High Court rules no limitation period on recovering pension overpayments
22 April 2018
The High Court has ruled that there is no statutory limitation period in which to recover pension overpayments under a defined benefit (DB) scheme, as long as this is by adjusting future payments.
Professional Pensions has reported that the recent centred around whether BIC UK Pension Scheme Trustees had effectively introduced annual increases to pensions via a meeting in 1991, and, if not, whether the payments could be recouped.
However, reports PP: “…recovering such payments cannot be as simple as seeking determination by The Pensions Ombudsman (TPO), but that this determination would then need to be enforced by a County Court, the court ruled in Burgess and others v BIC UK.
Through an executed deed to alter the scheme's rules in 1993 and a resolution passed by trustees recorded in minutes of a meeting in 1991, members became entitled to annual increases at the lower of 5% or the Retail Prices Index for the period between 6 April 1992 and 6 April 1997.
While much of the judgment deals with the process taken to introduce the increases - which was deemed effective - Justice Arnold also confirmed that the six-year statutory limitation period on claims did not apply to equitable recoupment.
However, this process - one of "equitable self-help remedy" - must be conducted via an adjustment of benefits in the future, rather than a request to be repaid monies previously received by members.
Further, while "it would be the trustees' duty, and not inequitable, to seek to recover overpayments and thereby increase the assets available for the benefit of all the members", trustees should review this on an individual member basis, as it may be inequitable in some cases.
Trowers & Hamlins partner Martin McFall, whose firm acted for BIC, said the case was significant as it dealt with a number of complex pensions issues.”