Q&A: What is the pension payment error all about and can the money be recouped?

Irish Times

a day ago

Unions and representatives of retired civil servants say they are awaiting detail of the
errors made in relation to the pensions of their current or former members
. However, there is concern that some of the issues could require legislation and that senior politicians could be impacted by any changes to the law.
What has happened?
On Tuesday the Minister for Public Expenditure
Jack Chambers
said 'serious and systemic operational issues' had been identified at the
National Shared Services Office
(NSSO), which employs about 850 people and handles payroll administration for all government departments.
The belief is these errors have resulted in some retired civil servants being underpaid in their pensions; incorrect pension contributions having been deducted from current and previous ministers; and the wrong amount of tax being deducted from the lump sums paid to about 30 senior civil servants upon retirement.
With a review of 13,000 retirees' positions under way, however, and an external audit of the NSSO to be undertaken, it is uncertain how the situation will develop.
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What will happen in respect of people who owe or are owed money?
Mr Chambers said he was committed to ensuring 'all monies owed to the State are fully recouped and monies owed to individuals are refunded'. The former is likely to create issues, however, especially in relation to the larger amounts, with one retiree said to owe €280,000.
With Mr Chambers suggesting some ministers may be asked to repay more than €30,000, the tax issue could be considerable.
Details of the time frame have not been clarified, but Ciaran Rohan of the Association of Higher Civil and Public Servants says recouping overpayments stretching back more than four years could leave retirees, or potentially some politicians, substantially out of pocket.
This is because current legislation would only allow the reclaiming of the extra tax paid as a result of receiving the extra money for the past four years, even if the overpayments stretched further back.
Could that be changed?
Only by legislation, says employment lawyer Barry Kenny, who says the issue means 'the original error has financial implications beyond a simple repayment issue'. It also has the potential to make it a political one.
How could the money be recouped?
A government circular in 2018 sets out the various ways in which overpayments can be reclaimed but there is no provision for anything like a liability of €280,000.
The intention should be to recoup all the money and ideally within a year, it suggests, usually by deductions from pay or pensions of up to 8 per cent of the gross amount the person is receiving.
But these people
can afford to repay, no?
The largest figures relate to people who had pension funds on retirement worth more than €2 million. That would certainly suggest they are well off but coming up with the funds to repay a six-figure sum is likely to be regarded as an issue.
Cloda Ryan of the Retired Civil and Public Servants Association (RCPSA), which has some 7,000 members, says the vast majority of amounts involved are likely to be far smaller but still have the potential to cause problems for the pensioners concerned.
'Contrary to public perception, the majority of Civil Service pensioners have moderate pensions, in many cases lower than they would receive under the social welfare State pension for which, in general, civil servants recruited before April 6th, 1995 do not qualify.'
The organisation is seeking assurances 'that no recovery of pension overpayments would take place without consultation and agreement with each pensioner affected'.
And if an agreement can't be reached?
'Any civil servant faced with a request to refund money, large or small, should take legal advice to clarify the legal basis for the demand to repay and whether the figures are accurate,' says Mr Kenny. He says where the validity is established, 'reasonable' deductions or instalments would need to be agreed.