Whenever money is paid out in error, there is always a question of when, and whether, the individual recipient can repay.
Some people may have enough saved in readily realisable assets, such as cash accounts, to enable them to make a repayment.
Others may be lucky enough to have a scheme that will write off smaller adjustments - and they might not even be contacted about the issue in the first place.
As John Lawson, head of policy, retirement solutions, for Aviva, comments: "There is a strong argument that any overpayment should be met by the scheme administrator as it was their fault the records kept were wrong."
However, he says there are instances where the member should have known the benefits paid or transfer value were much higher than they should have expected.
Therefore, Mr Lawson explains: "In this case, the argument the administrator is responsible is weaker, as anyone should know whether the benefits they received were reasonably correct in relation to their salary and length of service."
This is because benefits are usually calculated on a 1/60ths or 1/08ths basis.
So what happens if the scheme does demand clawback from its retired members? And what if clients have already spent the money and it just is not there for repayment? How can advisers help clients or prospective clients who may be in this category?
Phil McGovern, managing director of MPA Financial Management, admits: "That's a tough one."
He says: "I would ensure the client always has an emergency fund of cash available for any unforeseen circumstances."
Fighting your corner
In some cases, it might be worth pushing back on the administrators, depending on the documentation and wording of any forms the client might have. This is because the administrators may be forced to concede their error and waive the clawback.
Mr McGovern gives an example of a transfer which was overpaid in the client's favour.
"We had a client recently who transferred a defined benefit (DB) scheme a year ago and the trustees wrote to the ex-member and said they had done a calculation and realised they had overpaid the transfer value by £100,000 - and could they have it back.
"They tried bullying the client into handing it over, until they approached us and we advised the client to refuse to do so. They had signed a discharge form at that time which discharged the scheme from all liabilities to the member at the date of transfer, so that was the administrator's error, and they had to suffer the financial loss.
"Which they did."
