Top lawyer says Government u-turn will mean at least £8.25M for more than 20,000 Yorkshire savers

Pensions refund

26.02.2007

One of Yorkshire's top pension lawyers has welcomed a government u-turn which he says is likely to mean pensions refunds totalling at least £8.25m for more than 20,000 people in the county.

But Nigel Bolton, of national law firm Irwin Mitchell, based at its offices in Queen Street, Leeds, expressed concern at reports the payments may be delayed and called on the government to hand the money back as soon as possible.

Mr Bolton was commenting on a joint statement by paymaster general Dawn Primarolo and pensions reform minister James Purnell, revealing people set to rely on the state pension who had deliberately made national insurance overpayments since May 25 last year may get refunds.

Pensions Law expert

He explained: "The top-ups were made by men who thought they would have to make the equivalent of 44 years payments and women who believed they would need to accumulate 39 years contributions, in accordance with current law, to qualify for the maximum pension.

"People not achieving those levels currently receive reduced amounts and each year the Revenue & Customs sends out three million letters nationally warning people they face less lucrative old ages unless they top up their contributions."

In last November's Queen's Speech, however, the government announced it planned to cut the qualifying period to 30 years for men and women reaching pension age from April 2010, which will save workers up to £7,000 each.

Mr Bolton said if the cut in qualifying years took effect and the government had not reversed its initial opposition to the refunds, the extra contributions would have wasted.

He said May 25 was the significant date, as it was then the government published its White Paper announcing wide-ranging pension reforms. It had no plans to issue refunds for voluntary contributions made earlier, as it said these were paid properly, in line with the law and its policy at the time.

Pensions legal advice

Mr Bolton said: "At the date of the Queen's Speech, more than a quarter of a million UK people - mostly women on career breaks, the self-employed and those working temporarily overseas - were making top-up payments. It's likely around 21,000 of these were from Yorkshire.

"If each of those savers has paid in a years worth of extra contributions since May - just under £400 - which is likely to be a big underestimate, the total due to them will be well over £8.25m."

Mr Bolton welcomed the possibility of limited restitution but said the government should confirm affected people would be recompensed as soon as possible and not have to wait until they retired before receiving refunds, as some experts believed likely.

He said: "It's definitely a step in the right direction for the government to change tack, though its only doing what is morally right, especially as the people concerned were following its advice. But a phrase lawyers know well is justice delayed is justice denied and the only way of treating these people fairly is for their overpayments to be restored at the earliest possible date."

Mr Bolton said the next step was for the Revenue & Customs to decide, in conjunction with relevant stakeholders, the exact conditions for entitlement and administrative procedures leading to the refunds.

He said: "Anyone who thinks they may have a claim should keep an eye on the Revenue & Customs website and consult a pensions lawyer if they're in any doubt about their eligibility or how to go about securing repayment."