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Health worker pensions in chaos after overpayment blunder

16 December 2008

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A huge overpayment error is likely to see thousands of former NHS employees face lower pension payments in the future.

The chaos, which also includes other retired public sector workers, is thought to date back years and could run into the hundreds of millions of pounds.

Though the government does not plan to “claw back” the cash immediately, many could be left struggling to make ends meet due a decrease in the amounts paid in the future. Recent heavy falls on the stock market and sharp reductions in interest rates have already many cut pensioners’ income from savings.

The situation only emerged after Lib Dem Treasury spokesman Vince Cable received a tip-off and challenged Chancellor Alistair Darling in the Commons.

He said a firm called Xafinity Paymaster was believed to have overpaid public sector pensions to health service staff “for decades”.

Mr Darling said that repayments were “not going to happen”.

But he added: “It will be necessary to adjust what’s paid for the future. It does need to be put right from next year.”

Xafinity is believed to distribute 5% of public sector pensions, but it is not yet clear how much has been overpaid or what geographical areas are involved.

Copyright © Press Association 2008