Employment and pensions

Recovering pension overpayments: UK Court of Appeal gives trustees clarity

Published on 20th Nov 2023

The decision finds that the Pensions Ombudsman is not a 'competent court' for recouping benefits


The Court of Appeal has recently confirmed in The Pensions Ombudsman v CMG Pension Trustees that a court order is required when seeking to recoup overpaid pension from members, a determination by the Pensions Ombudsman alone is not sufficient to recoup a disputed sum.

Recovering overpayments

When trustees discover that benefits have been overpaid in the past, there are two main ways of recovering the overpayments. The first is to ask the member to repay them. The second is to bring a claim for equitable recoupment by making deductions from future instalments of benefits.

However, where the member disputes the amount or the terms of the recoupment (or whether the trustees are entitled to recoup benefits at all), section 91(6) of the Pensions Act 1995 applies. In a situation where there is a dispute, section 91(6) provides that no reduction of benefits should be made without an order of a "competent court".

The 'competent court' question

The question that has long been unresolved is whether the Pensions Ombudsman is a competent court for the purposes of section 91(6). In the High Court decision of CMG Pension Trustees Limited v CGI IT UK Limited (2022), Mr Justice Leech confirmed previous legal authority that the Pensions Ombudsman was not a competent court in this context. The ombudsman disputed this and himself appealed Mr Justice Leech's decision.

The Court of Appeal's decision has brought some clarity to the position. The court has ruled that for the purposes of section 91(6) of the Pensions Act 1995, the Pensions Ombudsman is not a "competent court". The Court of Appeal agreed with Mr Justice Leech's assessment and supported his reasoning – among other points made – that the Pensions Ombudsman cannot be seen as a competent court as it lacks the power to investigate overpayment disputes at the trustee's request: disputes can only be considered if referred by a member.

A County or High Court order

In light of this decision, trustees will need to seek a County Court or High Court order that an overpayment has been made before recoupment can be sought. Although an additional administrative hurdle before recoupment can be effected, trustees do not need to commence a new action in the County Court, or invite the County Court to re-consider the merits of the matter.

The Court of Appeal was unequivocal that the County Court does not exercise any judicial function in this exercise; rather, enforcement in the County Court was described as an administrative matter only, which is carried out by a court officer on application.

Osborne Clarke comment

What are the main points for trustees to take note of from the Court of Appeal decision?

A Pensions Ombudsman decision resolving a recoupment dispute in the trustees' favour is not sufficient to start adjusting future benefits. It is now clear that trustees must seek a court decision before enforcing the determination.

Trustees who are in dispute with a member regarding recoupment of overpayments should seek legal advice as to whether they can apply to the court for a decision that an overpayment has been made before adjusting benefits. It may not be necessary for the member to pursue the Pensions Ombudsman process first.

The time taken to get a determination enforced will vary from court to court and so trustees should be alive to the additional time the enforcement process will take. Where complaints are taken to the Pensions Ombudsman, trustees should take steps, to the extent possible, to seek determinations that are clear and to the point, making it easier for a court officer to enforce.

Should trustees require advice in relation to recoupment, or enforcing decisions of the Pensions Ombudsman in the County Courts, please reach out to one of our experts.


* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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