Skyrocketing pension credit fraud cases lead to historic high in overpayments
Overpayments of pension credit hit a staggering new high of £610 million for the financial year ending in April 2025, according to new data from the Department for Work and Pensions. That's a whopping increase from £530 million, or 9.7% of payments, just a year ago!
The major causes of these overpayments were numerous errors, both from claimants and officials. Claimant errors accounted for £240 million, while official errors accounted for £100 million. Shockingly, fraud accounted for almost half of the overpayments, reaching a record £270 million.
Jon Greer, head of retirement policy at Quilter, criticized the system, stating, "Given that pension credit is targeted at some of the most financially vulnerable pensioners, the system needs to strike a careful balance between accessibility and fraud prevention, and it appears to be struggling on both fronts."
The DWP also reported that 1.2% of pension credit claims were underpaid, representing a significant increase over the previous year. To combat these errors, Jon Greer suggested proactive communication from the DWP and HMRC, especially for those with complex entitlements.
Now, if you're wondering what to do if you've been overpaid, there are several options available to you. First, you can appeal the decision if you disagree with the overpayment determination. Additionally, you can request a waiver for repayment if you can prove that repayment would cause financial hardship. You can also negotiate a repayment plan with the DWP, or address the official error by informing the DWP to rectify the situation. Ultimately, preventing future errors requires both claimants and officials to ensure accurate and timely reporting of changes in income or circumstances that affect benefit entitlements.
In the context of personal-finance, overpayments in mortgages could potentially lead to a similar scenario as the record-breaking pension credit overpayments, reaching millions of pounds, if inaccurate reporting of income or changes in circumstances persists. To avoid financial hardship due to overpayments in pensions or mortgages, it's essential to maintain open communication with financial institutions like the DWP or HMRC.
