An estimated 95,000 public sector pensioners, including retired NHS staff, have been overpaid up to £140m in a pensions blunder that began in 1978.
The figure is set to rise, as it does not take into account separate NHS and teachers’ schemes in Scotland and Northern Ireland and the separate civil service scheme in Northern Ireland.
According to Cabinet minister Liam Byrne, those affected will face having their payments cut, but they will not be required to pay back the money as it would not be “cost-effective”.
He rejected calls to phase in any reductions to help pensioners cope with the change, many of whom are already struggling with sharp falls in interest rates which have affected savings and share values.
Mr Byrne said there was “no single cause” for the error, which has impacted on 5% of those receiving payments.
The mistake came to light when pension scheme administrators were trying to calculate the Guaranteed Minimum Pension (GMP) individuals should receive.
Mr Byrne said: “Our investigations have revealed that in 95% of cases this information is correctly recorded. But in some cases it is not. In those cases schemes have paid the annual increase on the full pension each year instead of the GMP entitlement.”
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