UK defence ministry seeks millions from veterans over pension administration errors

The UK Ministry of Defence is pursuing more than 1,000 retired military personnel for pension overpayments caused by administrative errors. The majority of these cases involve 335 veterans who were collectively overpaid £5.1m due to incorrect National Insurance calculations.

Retirees are facing sudden, severe reductions in their monthly income to recover the funds. Ray Lawton, a 70-year-old who served 16 years in the Royal Artillery, saw his pension drop from £550 to £365 after being told he owed £8,000. "I haven't got £8,000 to pay out," Lawton said, noting he trusted the military to manage his retirement funds correctly.

The Forces Pension Society reports that some individuals face debts reaching six figures. Andrew Thorburn, a Royal Navy veteran, was informed he owes £26,438, resulting in a £650 monthly pension cut. He described the financial shock as "absolutely devastating" and questioned how the government could hold individuals liable for institutional mistakes.

This crisis underscores the long-term liabilities associated with outsourcing government services. Equiniti currently administers the pension scheme on behalf of the defence ministry. Technology firm Sopra Steria assumed control of the broader veterans' pension scheme in 2023 and subcontracted the administration to Equiniti.

Both companies have distanced themselves from the root cause of the financial discrepancies. Sopra Steria stated that the errors originated more than a decade before it secured the contract. Equiniti noted that "administration of a scheme of this scale involves multiple organisations, systems and processes over many years", while emphasizing it is not responsible for the decision to recoup funds.

The government maintains it has a duty to recover taxpayer money, though it claims to be doing so proportionately. Former Conservative defence secretary Penny Mordaunt challenged this approach, arguing that no assessment has been made on whether recouping the costs makes financial sense. She suggested there is a compelling case to wipe the debts in many instances.

The Ministry of Defence confirmed it is investigating the issues case by case, citing errors related to Pension Sharing Orders, Early Departure Payments, and State Pension Age. Of the £5.1m tied to National Insurance mistakes, only £304,000 has been repaid so far, with a third of affected veterans paying in full and 52 on agreed repayment plans.