Recap: the CMG decision 

In November we reported on the decision of the Court of Appeal in the CMG case, where it was held that the Pensions Ombudsman (“TPO”) is not a “competent court” for the purposes of s91(6) of the Pensions Act 1995.

The effect of the decision is that a determination of TPO alone is not sufficient to allow trustees to recoup overpayments of pension where there is a dispute.  In order to enforce such a TPO determination, Trustees will need to apply to the County Court for an order.

At the time, TPO issued a statement confirming it was reviewing its position and would provide an update shortly.

TPO response - recoupment factsheet

That promised update was published just before Christmas in the form of a statement, together with a 3 page factsheet

The statement emphasised that TPO was disappointed with the decision, and that the effect of the ruling is to provide an additional hurdle for schemes seeking to recoup overpayments. It is noted that the DWP “is supporting legislative changes to formally empower TPO to bring an outstanding overpayment dispute to an end without the need for a County Court order”.

Pending any such legislative change, the factsheet provides guidance on how TPO will approach disputed overpayment cases.  Key takeaways include:

  • All possible defences to the proposed recovery of the overpaid pension should be raised and properly dealt with during a Scheme's IDRP process;
  • Alongside efforts to resolve the complaint via the IDRP / pre-determination processes, the schedule of recoupment should be considered at an early stage, so that if the dispute does need to be resolved by a TPO determination the parties have a proposal in mind;
  • Where a TPO determination is made, this will set out a schedule of the amounts and rate of recoupment.  An enforcement order must then be sought from the county court;
  • The county court will not revisit the merits of the member’s complaint; its role is to authorise the pension scheme to commence deduction of the overpayments; 
  • The factsheet includes procedural guidance on how the application should be made and to which county court (the nearest one to the member).

What does this mean in practice? - the Mr Y v AECOM Pension Trustee Ltd determination

At the same time the factsheet was published, the PO also published its first determination in an overpayments case following the Court of Appeal’s decision in CMG. 

The determination includes a detailed discussion of the various defences by which a member could seek to avoid the recovery of the overpaid pension. On the basis of the particular circumstances of this member, the PO found no successful argument / defence.

However, Mr Y’s complaint was partially upheld due to the Trustee’s action in beginning recovery of the overpayment without a court order.  On this subject of recouping overpayments, the determination makes the following key points:

  • Where the recovery of an overpayment is disputed (whether the amount or the period of recovery), if the trustees commence that recovery without the order of a competent court (as required by s91(6) PA95) they will be acting unlawfully and in breach of trust;
  • This may also constitute maladministration by the trustees.  On the facts of this particular case, no maladministration was found, since the trustees had acted in accordance with the legal advice they received at the time (recoupment began in 2018 and thus predated the CMG decision).  However, TPO made clear that this was case-specific and that in future such deductions being made without the relevant order would be likely to be considered maladministration;
  • The Trustee was ordered to repay the amount that it had recouped from the member without an order from a competent court (this had been achieved by with-holding increases since 2018);
  • The Trustee was directed to apply to the county court for an order per the CMG decision and TPO’s new factsheet (which was referenced in the determination).  Once the order had been obtained, the Trustee would be able to recover the overpayment again (provided that the approach is not “inequitable” and is otherwise in accordance with the law), in accordance with the schedule of recoupment set out by TPO in its determination;


Together with the Mr Y v AECOM determination, the factsheet published by TPO provides welcome clarification on how trustees should approach the recovery of overpaid pensions in the event there is a dispute with the member. 

Of course, the starting point is always that trustees should administer the scheme in accordance with its rules, and that where a payment has been made in error trustees are able to seek to recover it.  However, members may have a defence to such recovery (e.g. change of position).   

It is now clear that post CMG, if the recovery is disputed by the member, the Trustees will be acting unlawfully if they commence recoupment without an order from the county court – this is likely to be considered maladministration as well as a breach of trust.  Pending any legislative change, this means it will take longer before the money is back in the scheme since post a TPO determination, the trustees will need to go through the additional administrative step of obtaining a county court order authorising the recoupment to begin. 

If you need any assistance with an overpayments case or a member dispute, please do get in touch with me or your usual Pensions team contact.