Grieving sisters Elaine Briscoe (48) and Sandy Millington (45) from Middlesborough, were forced to pay back almost £110,000 to a pension firm, after it told them it had accidentally sent them the wrong person's payout. By then a significant proportion of the money had already been spent.
The Daily Mail reported that their dad, Robert Gent, had retired from grave-digging at the age of 65 in 2008, and the sisters had spent three years trying to track down their father's pension and secure an income for him. By the time of his death in 2011 they still hadn't found the money, but continued searching in his memory.
In 2013, Friends Life apparently found the pension fund, and gave them a payout of almost £110,000. According to the Metro, they split £40,000 between the grandchildren, and spent £20,000 of the cash.
It was then - a few weeks after sending the money - that Friends Life told them they had been given the savings belonging to another man with the same name - and demanded full repayment.
They were forced to sell their father's home and borrow from friends and family to repay £108,895. They made the full payment by last October, but because they hadn't been able to return the cash immediately, Friends Life took them to court for £6,000 in costs plus £1,000 in interest.
Could it happen to you?
This magnitude of mistake is thankfully highly unusual. However, accidental overpayments are worryingly common. There are no official statistics on the total, but occasionally massive blunders will hit the headlines. In 2008, for example, the government admitted that 95,000 public service pensions had been overpaid for the previous 30 years.
If it happens to you, there's nothing to stop the pension company clawing back overpayments made in the previous 15 years. They will immediately reduce your pension payments - and include an underpayment each month on order to force you to repay. Different companies and schemes have different rules about how this is done.
If you discover you have been overpaid, the first step is to contact the pension company and make a complaint. To explain why you shouldn't be forced to repay every penny, you need to outline why you didn't know about the overpayment, and how you have spent the money.
If, for example, you were paid this sum from the outset, they are far more likely to believe you didn't know about an overpayment than if your payments shot up overnight. Likewise, if you have made major outlays based on your new income, and spent the extra money, they may take this into consideration.
The pension company may reduce the amount you have to pay, but if they won't co-operate you may need to take your complaint to the Ombdsman.
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