Court of Appeal clarifies approach to recoupment of overpayments

10 minute read
18 December 2023

The Court of Appeal's ruling in The Pensions Ombudsman v (1) CMG Pension Trustees Limited and (2) CGI IT UK Limited [2023] EWCA Civ 1258 1 November 2023 follows the decision of Mr Justice Leech in 2022 that the Pensions Ombudsman (TPO) is not a "competent court" (the High Court decision was covered in our insight of October 2022) for the purposes of section 91(6) of the Pensions Act 1995.

Following the judgment of Mr Justice Leech, TPO obtained permission to intervene in the proceedings and appealed to the Court of Appeal. Despite TPO's intervention, the Court of Appeal has upheld the judgment of Mr Justice Leech. TPO is not a "competent court" for the purposes of section 91.

There had been concerns that such a conclusion would make it more difficult for trustees to recoup overpayments in the event of there being a dispute with scheme members because it is necessary to obtain an order from a "competent court" under section 91(6) before recouping.

However, although the Court of Appeal concluded that TPO is not a 'competent court', the implications of this ruling were softened by the practical approach the Court of Appeal took to how such an order might be obtained. The Court held that, if a party (which will typically be a trustee) wishes to enforce a determination or direction of TPO, they should deliver a certified copy of the determination or direction to the County Court and the court officer will take the necessary steps to enforce it as if the determination or direction had come from the County Court itself. In other words, it will not be necessary for the trustee to bring separate proceedings in the County Court for an order before recouping.

TPO's powers

TPO has wide-ranging powers.

TPO may investigate and determine complaints alleging maladministration in connection with any act or omission in the management of an occupational (or personal) pension scheme. TPO can also investigate and determine any dispute of fact or law in relation to an occupational or a personal pension scheme between a person responsible for the management of the scheme and an actual or potential beneficiary.

TPO is often asked to adjudicate complaints made by members of pension schemes who have been overpaid and who are then asked to repay those sums either directly by a one-off payment or series of payments or by the trustees of the scheme recouping the overpayments by reducing the pension payments the member would otherwise receive in the future.

Section 91 of the Pensions Act 1995

Section 91 of the Pensions Act 1995 sets out a series of restrictions on the assignment, set-off or charging of rights to pensions under occupational pension schemes. However, it also contains some carve-outs permitting set-off and assignments in prescribed circumstances.

Where trustees are seeking to recoup an overpaid sum from a member and where a dispute arises with the member in relation to it, the set-off cannot be exercised unless the trustees have obtained an order from a 'competent court' under section 91.

Assuming the self-help remedy of recoupment operates by way of a set-off (which has itself been the subject of legal debate over the years), an issue arises as to whether TPO is a 'competent court' for these purposes such that the trustees can then proceed to recoup where TPO rejects the member's complaint.

Mr Justice Leech had ruled that TPO is not a 'competent court' (following the view taken by Mr Justice Arnold in Burgess v BIC UK Ltd [2018] EWHC 785 (Ch), [2018] Pens LR 13 [152]. That aspect of his judgment cast serious doubt on whether trustees could implement recoupment on the back of a TPO determination alone.

The first instance decision

Although the decision of Mr Justice Leech centred on what he decided was a forfeiture provision in the pension scheme's rules, he also had to consider whether TPO is a 'competent court' for the purposes of section 91(6) of the Pensions Act 1995 because questions had been raised with the court about the recoupment of overpayments.

Mr Justice Leech held that, where a trustee seeks to recover overpayments by recouping from the future payment of pension, it was unnecessary for a trustee to obtain a money judgment or an order for payment. It was "enough for it to satisfy a court of competent jurisdiction that it is entitled to exercise the right". He then clarified that the requirements of section 91(6) would be met if the trustee obtained a declaration against the member that it was entitled to exercise its right to recoup, say, £1,000 by deducting the sum of, say, £10, per month from future instalments of pension beginning immediately.

Therefore if the recipient of an overpayment disputes the entitlement to recoup, amount or rate, following Mr Justice Leech's decision, in our view, the trustee could not have recouped unless a court of competent jurisdiction had made an order declaring that there has been overpayment to a particular extent.

The Court of Appeal decision

Following the first instance decision by Mr Justice Leech, TPO obtained permission to intervene in the proceedings and it appealed to the Court of Appeal on the 'competent court' question.

While the Court of Appeal decision upheld the judgment of Mr Justice Leech, it offers new guidance for trustees who are seeking to recoup overpayments. Even though TPO is not a 'competent court' for the purposes of section 91(6) it can still make determinations and directions in relation to overpayments and the recoupment of benefits which can then be enforced in the County Court.

Enforcement in the County Court is an administrative matter and must be carried out by a court officer. As such, helpfully, there is no requirement to commence and pursue a separate action in the County Court or for that court to consider the merits of the dispute with the member.


The process for seeking the recovery of overpayments by recoupment has now been clarified.

Before the CMG case, many trustees sought to have disputes over recoupment resolved via TPO.

Mr Justice Arnold's ruling in Burgess v BIC cast doubt over that approach because of what the judge said about TPO not being a 'competent court'. In response to this, TPO had produced a factsheet explaining why it considered it is a 'competent court'.

In the light of Mr Justice Leech's decision in the CMG case (which supported Mr Justice Arnold's views), it was thought that trustees might be forced to issue fresh proceedings in the County Court seeking the kind of declaration referred to above in the event of a dispute with a member/recipient of an overpayment.

While the Court of Appeal has found that TPO is not a 'competent court' for the purposes of section 91(6), it has given trustees reassurance that there is no need for them to incur the costs of issuing and pursuing County Court proceedings to secure recoupment.

All they have to do is to send a certified copy of TPO's decision to the County Court, which will then enforce it. As the Court of Appeal held 'Determinations and directions of the Pensions Ombudsman are enforceable without the need of any further judicial input.'

That's simple enough then?

While this is not as simple an answer as we could have had, the Court of Appeal's decision brings welcome relief from the effects of the first instance decision.

Key takeaway

We are not back to the world before the CMG decision where TPO's determination might have resolved a dispute over recoupment of overpaid sums but we are in a better place than we were before the Court of Appeal clarified the approach to recoupment.

In practice, if trustees find themselves in dispute with a member over recoupment even after TPO has determined the matter, they will need to go to the County Court to enforce the determination albeit that process can be treated as a mostly administrative matter.

To discuss any of the points raised in this article, contact Charlotte Scholes and Aaron Dunning-Foreman

For further insight, read our article on 'Forfeiture, recoupment and the Pensions Ombudsman's reach (4 October 2022)' and article on the Court of Appeal decision for 'The Pensions Ombudsman v (1) CMG Pension Trustees Limited and (2) CGI IT UK Limited [2023] EWCA Civ 1258 (1 November 2023)'.

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