Up to 93,000 retired members of the Teachers Pension Scheme have been shortchanged in their pension payments by an aggregate total of around £35m.
This debacle is highlighted in 2017 Report & Accounts of the Teachers Pension Scheme laid before Parliament on 18 July.
The Teachers’ Pension Scheme is the second largest public sector pension scheme in the UK with 1,944,529 members as at 31 March 2016.
The under payment occurred during the period April 2011 to April 2015 and only came to light in August 2016 following detailed investigation into the payments received for an individual member of the Teachers Pensions Scheme as part of a separate complaint case.
Wider investigations revealed that more members were affected.
When a member retires in any given financial year, the scheme does not know the pension increase factors to be applied to fully index the lump sum and pension up to the date of retirement until they are published by HM Treasury.
The pension increase factors are not typically published until the following March.
An adjustment to the pension for members who retired in the period is usually undertaken as part of the annual exercise to uprate all pensions in payment in line with inflation.
However, during the period April 2011 to April 2015, for some members this did not happen.
The report and accounts stated: “A formal rectification project is in progress to accurately identify all affected members, to contact any such members, take corrective actions on the impacted member records, and ensure member benefits (estimated at around £35m) are accurately paid.”
Administration of the Teachers Pension is outsourced to Capita.
Commenting on the mistake, a Capita Employee Benefits spokesperson said: “We have identified that a number of members of the Teachers’ Pension Scheme who retired between April 2011 and April 2015 may be due an additional payment.
“We are informing all those affected and are processing additional payments as swiftly as possible. Steps have been put in place to ensure this doesn’t reoccur.”
Payments to the retired teachers will “vary due to each individual’s circumstances”.