Executries and pension overpayments

What is the Scottish Public Pensions Agency (SPPA)?

SPPA administers pension schemes for NHS, education, fire and rescue, and police personnel in Scotland. Around 10% of Scotland’s population have a direct interest in pensions administered by SPPA.

The pension life cycle is long and complex, but essentially pension administration and management commences with employment and continues throughout a member’s working life to retirement and ultimately cessation of pension payment at the death of the member or their surviving beneficiary. There are roughly 4,000 pension scheme member deaths per annum.

SPPA and solicitors often need to work together to manage the closure of the pension entitlement on behalf of the surviving relatives. This relationship currently works well, but as more financial and legal services go online and digital, and in the spirit of getting things right first time, SPPA sees further scope for improvement.

How does overpayment occur?

In a number of cases SPPA is not notified in sufficient time by family members, executors or statutory bodies to stop pension payments after death. For instance, pensions are frequently paid into joint accounts and it is not always evident to relatives what the nature of the receipt is and from where it comes. For these and other administrative reasons, payment often continues for some time after a member’s death, creating a debt that needs to be repaid before the estate is settled.

SPPA participates in a number of exercises to identify members whose death has not been notified. Use of notification under the National Fraud Initiative and extraction of data from Registers of Scotland provides the date of death, but as this exercise is only carried out twice a year, overpayments still occur.

How can solicitors help?

On a day-to-day basis, SPPA works with solicitors to manage the distribution of net proceeds from estates in a timely and efficient manner. From our experience, the process works well when:

• there is an accurate estimate of the time required to distribute the estate if no immediate payment is appropriate;
• if there are no assets to distribute, a statement is made to this effect;
• responses are promptly given to enquiries;
• repayments of overpaid pensions are made on a timely basis.

If you have any specific overpayment cases, general queries about this article or would like to discuss any of the wider issues raised, please contact Mark Cockburn, Pension Scheme Manager, SPPA on 01896 893256.

Finally, SPPA would like to thank legal practitioners with whom it has successfully resolved overpayment issues. We would like to build on this relationship in the future to work in partnership more effectively and lessen the stress that can occur at what is a difficult time for our customers and solicitors’ clients.