The Cabinet Office has confirmed today that 5% of public pensioners, including teachers, civil servants, NHS employees and members of the armed forces, have had their pensions incorrectly calculated since 1978.
This affects 95,000 people across five pension schemes.
Liam Byrne, minister for the Cabinet Office, said: "The advice of the accounting officers of the five schemes is that it is unlikely to be cost-effective to attempt recovery of these monies from individuals. Correct pension payments will be ordered immediately from April 2009. This means some pensioners will have their payments reduced and others will see increases in their payments in 2009 that are less than the annual inflation uprating."
Despite speculation in the national media that the cause of the mistaken payments was due to oversights by former public body Xafinity Payaster, Byrne said there was "no single cause" to the overpayments, but HMRC and the Department for Work and Pensions were investigating the case.
Xafinity Paymaster has denied it is to blame for the problems. In a statement, a spokesman said: "Xafinity Paymaster confirmed that it is not responsible for this issue.
"Xafinity Paymaster prides itself on its professional delivery of many thousands of pension payments, over many decades, both in the UK and worldwide. Xafinity Paymaster pays pensions in accordance with regulations and the instructions provided from pension schemes and HMRC.
"In the case announced by the Cabinet Office ministerial statement, a number of public sector pension scheme administrators, including Xafinity Paymaster, were not notified of the correct data. We are now working very closely with its public sector clients to help those schemes identify data issues and correct future pension payments as quickly as possible."
All pensioners affected have been notified in writing.
