NHS pension recovery 'policy' causing distress

STEP has received a complaint from a member of the public regarding difficulties with an NHS pension provider during the administration of his sister-in-law’s estate, and we are copying this here to see if any forum members have experienced similar issues.

Christopher was the executor of Rosie’s estate and within a month of her death Christopher wrote to the NHS pension (Equiniti) in order to cancel the pension payments. It transpired that that an over payment had already been made to Rosie’s Santander account. Christopher’s wife Margaret had become joint account holder with Rosie a couple of years earlier, however in spite of her legal title to the account, Equiniti stated, ‘£936.31 has been overpaid for the period from 27 April to 28 May 2014. To avoid troubling you about arranging for this sum to be repaid, I have asked Santander to refund it to me direct.’ Fortunately, Santander disregarded this request and Christopher requested a detailed breakdown from Equiniti which should have been provided initially. He raised further enquiries with Equiniti regarding their intention to access his wife’s account (technically) with no authority from his wife, him as executor, or a grant of probate. Their response was, ‘It is our policy to firstly try and reclaim any overpayments made following the death of a pensioner directly from the bank, so that we do not have to trouble relatives for repayment at such a distressing time.’

Clearly this kind of interference with an individual’s private account cannot be legally authorised unless it has been approved by the mandate holder. In this case, it was Christopher’s wife who was the surviving account holder, and she was not contacted at any point. Surely the NHS, like any other creditor, must agree the debt with the personal representative first and then await payment once the grant has been issued?

Following further enquiries, Christopher received the following statement from Dr Dan Poulter, the Parliamentary under Secretary of State for Health: ‘The attempted recovery of monies by NHS pensions from the bank account of someone who was in receipt of an NHS pension, but who has died, is standard practice and has been for a long time… It is done to more efficiently recover public monies and to prevent any additional or unnecessary administrative burden on the executors of the estate.’

In these circumstances, the legal title of the account belonged to a survivor who had no contractual relationship with the NHS. Even if there was no surviving account holder, the policy interferes with the personal representative’s duties to other creditors, beneficiaries and the probate court. In fact, if all creditors had the capacity to reimburse themselves arbitrarily then there would be very little purpose in obtaining a grant. Christopher feels it should be reinforced that a pension administrator cannot make a unilateral decision to retrieve a payment made to a personal account without consent of a legal authority. He feels the suggestion that the direct retrieval will avoid any ‘trouble’ for the relatives is absurd and antagonistic considering the amount of time and inconvenience it has caused him.

The NHS has now even revised its public leaflet to reinforce its policy that it will directly ask the deceased’s bank to refund any pension overpayment without any recourse to the person in charge of the account and the banks normally comply.

We are concerned that this kind of intrusive practice can cause a great deal of distress to bereaved family members, not to mention the legal and practical issues that arise from this ‘policy’, and would be interested to hear from anyone else who has experienced similar issues.

Louise Polcaro, STEP

I can’t recall this experience with the NHS pensions specifically but it is certainly the practice of some other pension providers - possibly also the DWP. I understand the point in your post regarding a joint account but have not considered the practice to be so objectionable in other cases.

One point I wanted to raise, though, is the position regarding creditors of the estate, because I feel this isn’t quite covered in the post.

It is my understanding that if a payment such as a pension is made to the deceased after the death and is reclaimed by the payer, that payer is entitled to have their money back, regardless of whether there are other creditors and even if the estate is insolvent. This is because the payment was not due to be deceased and is therefore not an asset of the estate available to other creditors.

Diana Smart
Gordons LLP

If it was an overpayment i.e. paid post death when it shouldn’t have been as there was a natural time lag between death and notification, then it wouldn’t have been an asset due to the estate and isn’t a liability of the estate. It is not the same as say the outstanding credit card bill or other creditor. I think in the majority of cases it is quite useful if the overpayments are able to be paid back directly as usually the payments are for relatively small amounts (e.g. weekly state pension etc) and the work involved in arranging the repayment and corresponding with DWP or other is probably not worth it.

Perhaps the solution is for the pension provider to send the PR a form to sign which authorises them to claim back the overpayment directly.

Victoria Motley
Forbes Solicitors