Pension overpayments are a common type of administrative error.
Overpayments raise a number of legal issues that require to be carefully considered when overpayment cases arise.

Once the error is discovered, trustees will normally want to pay the correct pension going forward.
They will also need to consider whether or not to seek to recover past overpayments from the relevant members.

As a general principle, members should only receive the benefits to which they are entitled under the scheme's rules.
Therefore, if a pension has been overpaid by mistake, the trustees will have a clear basis, in many cases, for recovering that overpaid pension from the member.

If the trustees intend to recover overpaid pension from a member, they should, first, write to the member and ask for repayment of the overpaid pension.
The member may agree to repay the money in instalments or may agree to future reductions to their pension
The Pensions Ombudsman has been critical of aggressive approaches by trustees to members requesting repayment so the care should taken with the tone of any communications.
The Pensions Ombudsman has also stated that the recoupment period should be at least as long as the period during which the overpayments occurred.

If the member refuses to repay the overpaid pension, then one option open to trustees is to bring an action in the courts.
There are, however, significant downsides to such proceedings as they can be relatively expensive if a small amount of money is being recovered.

An alternative to litigation is the remedy of recoupment, under which trustees make deductions from a member's future pension payments to compensate the trust for the overpayment.
This is a common way to recover overpaid pensions.
The trustees must ensure that the recoupment is fair and the rate of recoupment is not unduly harsh or inequitable.
The Pensions Ombudsman has specified that the recoupment period should be at least as long as the period during which the overpayments occurred.
Court approval is not usually required for the trustees to exercise recoupment.

In some circumstances, a member will be able to defend any attempt to recover an overpaid pension.
The most common member defence is that the member has changed his or her position such that it would be unfair to require the member to repay the money paid in error.
A member can also raise the defence of estoppel if the member can show that he or she received an unambiguous representation on which he or she reasonably relied, and that he or she suffered a detriment as a result.
Estoppel is rarely used because it is difficult to establish.

Under the Limitation Act 1980, trustees in England must bring any claim against a member to recover overpaid pension within six years from the date on which the mistake was discovered (or should have been discovered with reasonable diligence).
The legal position is different in Scotland where a five year period generally applies.

Negligence resulting in an overpayment being made may also give members grounds for a complaint about maladministration.
This is a separate matter from any question of the trustees recovering the overpaid pension.
Therefore, even where recovery is successful, the member could succeed in a maladministration complaint to the Ombudsman.