Told to repay your Armed Forces pension? What the MoD overpayment recovery means for you

Educational, not advice. This article explains the Armed Forces pension overpayment recovery: why some pensioners are being asked to repay money they were paid in error, what the rules actually say about recovering it, and the routes open to a member who thinks the demand is wrong. It is general information, not personal financial advice, and Pension Plain is not authorised or regulated by the Financial Conduct Authority. For free and impartial guidance, see MoneyHelper. Contact details for the scheme, the complaints route and the Pensions Ombudsman are near the end.

Updated 8 September 2026. The recovery reached the House of Lords on 2 September, at committee stage of the Armed Forces Bill. A defence minister was asked to consider writing off overpayments caused by administrative error, and undertook to arrange a meeting rather than answering. The debate also established why the demands land on pensioners at all. Both points are in the sections below.

In short

• More than 1,000 veterans have been told to repay Armed Forces pension that was overpaid because of calculation errors they had nothing to do with.
• The money is being recovered because Treasury rules start from a presumption that overpaid public money is pursued, whoever made the mistake.
• That presumption is not absolute. The same rulebook lists five defences a recipient can raise, and hardship is the one most likely to fit an ordinary pensioner.
• A defence minister told Parliament in November 2025 that in some cases “the debt may be partially written off”. That was the position eight months before any of this reached the newspapers.
• The complaints route is the scheme’s Internal Dispute Resolution Procedure, which for the Armed Forces schemes is a single stage with no appeal, followed by the Pensions Ombudsman.
• The “it happened more than six years ago” argument is much weaker than it sounds when the scheme is recovering by reducing your future pension rather than suing you.
• Both the complaints procedure and the Pensions Ombudsman are free. Nobody needs to be paid to help you use them.
• Peers were told on 2 September 2026 that Defence Business Services has no contractual way to recover these losses from the contractors that made the errors, which is why the money is being sought from pensioners instead.

What has happened

Over the past few months, Armed Forces pensioners have been receiving letters telling them their pension has been overpaid for years and that the money will be recovered. The sums are not small. One former Royal Navy warrant officer was told he owed £45,687 built up since 2021, with about £750 a month to be taken back over five years and his monthly pension reduced by more than £1,000. A retired Royal Navy captain was told he owed £16,000, at £414 a month. The Telegraph, which reported the cases on 25 July 2026, says some are higher still and that a number exceed £100,000, although the largest individually named case in the coverage is the £45,687 one.

None of these people did anything wrong. The errors sit in the calculations, and there is more than one kind. The Forces Pension Society, which has been publishing on this since September 2025 and updated its advisory again on 28 August 2026, lists the causes as pension sharing on divorce, early departure payments, guaranteed minimum pension issues, National Insurance abatement, and straightforward calculation mistakes. The Society says it continues to see the number of enquiries rising, so this is not a wave that has passed.

Two numbers get quoted together in the press, and they measure different things. The audited Armed Forces Pension Scheme annual report for 2025/26 records a specific error in how pension increases were applied at State Pension age where a National Insurance adjustment applies: around 1,900 members were reviewed, 323 had been overpaid, and the total was £5.1 million. The wider figure of more than 1,000 veterans covers the other categories of error as well. So £5.1 million is the audited total for one error, not the bill for everybody affected.

The timing is its own grievance. The Ministry of Defence identified the problem in November 2024. The letters did not reach pensioners until 2026.

Why you are being asked to repay someone else’s mistake

The answer is a Treasury rulebook called Managing Public Money, which governs how every government department handles money, including money it has paid out by accident. Its position is blunt:

In principle public sector organisations should always pursue recovery of overpayments, irrespective of how they came to be made. In practice, however, there will be both practical and legal limits to how cases should be handled. So each case should be dealt with on its merits.

That first sentence is why “but it was your mistake, not mine” does not, by itself, end the argument. The rulebook goes further and names the armed forces specifically as a group whose overpayments “should be pursued”, while adding that this should be done “taking proper account of how far recipients have acted in good faith”, that similar cases should be treated consistently, and that “legal advice is often wise to make sure that proper account has been taken of any valid defence against recovery recipients may have”.

Read the whole annex, though, and the picture is less one-sided than a demand letter makes it feel. The presumption is the starting point, not the finish. The same document sets out defences, requires departments to weigh them, and expressly allows recovery to be waived in some circumstances. The next section is what those defences are.

There is a second answer underneath the Treasury one, and it was not spelled out in public until September 2026. It is about who is contractually on the hook. Explaining the chain in the House of Lords on 2 September, Lord Davies of Brixton described it this way: Defence Business Services is responsible for the scheme through Veterans UK; it has contracted Sopra Steria to deliver the pensions; Sopra Steria has in turn subcontracted Equiniti as its paymaster; and the whole thing is overseen by the Armed Forces Pension Board, supporting the Secretary of State for Defence as scheme manager. The letter arrives from Equiniti, at the far end of that chain, and the member is party to none of it.

He then drew the consequence:

Defence Business Services has no contractual way to recover overpayments from Sopra Steria or Equiniti. The latter, in turn, is having to follow Treasury policy that overpayments of public service pensions should be recovered, thereby visiting the errors made by others on the individual veteran pensioners.

The department cannot bill the contractor, and the Treasury rulebook says the overpayment must be pursued, so the only party left is the person who received it. None of that changes what an individual member can do about their own letter, and none of the defences below get easier because of it. What it does explain is how a demand can arrive without anyone suggesting the pensioner did anything wrong, and why the Forces Pension Society’s argument about where the liability should sit is a question about contracts rather than a plea for leniency.

Before anything else: check the letter and ask for the sums

Two practical steps come before any question of disputing liability, and the Forces Pension Society puts both first.

• Check the letter is genuine. The letters are titled “Overpayment of Armed Forces Pension” and are issued by Equiniti, the payment agent, not directly by Veterans UK, which surprises people and makes a genuine letter look like a scam. Equiniti can confirm on 0345 121 2514, option 2. A demand for a large sum out of the blue is exactly the shape a pension scam takes, so checking is sensible whichever way it turns out.
• Ask for the full calculation. You are entitled to understand how the figure was reached, and requests for the methodology and a breakdown go to veteransukpensions@equiniti.com. Without the workings there is no way to tell whether the amount is right, and a dispute about the amount is treated differently from a dispute about whether anything is owed at all. If your letter is about National Insurance abatement, put Complaint: NIA26 in the subject line, followed by the letter reference number. The Forces Pension Society reports that this is the routing the National Insurance abatement letters themselves specify, and an email without it is not obviously going to the right queue.

Nobody should pay a third party to do either of these things. Both are free, and so is everything else described in this article.

If asking for the workings sounds like an obvious formality, the Lords debate on 2 September suggests otherwise. Lord Davies told peers that recovery demands “have lacked the detailed calculations to assure veterans that the new calculations are correct”, that veterans have been told verbally “We don’t provide calculations”, and that one member who put the request in writing was told to submit a freedom of information request to find out how his own pension had been calculated. So a refusal, if you get one, is not unique to your case. It is also a reason to make the request in writing and keep the reply: if the matter ends in a complaint, that exchange is the paper trail.

The defences that actually exist

Managing Public Money lists five defences that may be claimed against recovery: the length of time since the overpayment was made, change of position, estoppel, good consideration, and hardship. Good consideration is a narrow commercial idea and rarely touches pension cases. The other four are worth understanding, and each comes with a bar that the rulebook itself sets fairly high.

Hardship: the one most likely to fit

This is the defence with the clearest route for an ordinary pensioner, because it does not require you to prove anything about how the error happened. The rulebook says public sector organisations “may waive recovery of overpayments where it is demonstrated that recovery would cause hardship”, and it is explicit that this is not limited to money: recovery may be waived “where recovery would be detrimental to the mental welfare of the debtor or the debtor’s family”.

The limits are just as explicit. “Hardship should not be confused with inconvenience.” Where someone had no entitlement to the money, “repayment does not in itself amount to hardship”. And any plea “should be supported by reasonable evidence that the recovery action proposed by the paying organisation would be detrimental to the welfare of the debtor or the debtor’s family”. Evidence is the operative word. A statement that the repayment would be difficult is not the same as showing what it would do to your household.

Change of position: real, but hard

This is the defence people reach for instinctively: I received it in good faith, I spent it, I can’t give it back. It does exist. The rulebook describes it as applying where a recipient “has in good faith reacted to the overpayment by relying on it to change their lifestyle”, so that “it might then be inequitable to seek to recover the full amount”. It then adds the warning that matters: “The onus is on the recipient to show that it would be unfair to repay the money. This defence is difficult to demonstrate.”

What the Pensions Ombudsman has required in practice is a causal link. The spending has to be irreversible and it has to have happened because of the overpayment. One widely reported myth is that only extraordinary spending counts, a cruise or a new car. That is not right: in one case the Ombudsman accepted the defence from a member who had simply lived within an income he had no reason to doubt and had only modest savings. But in another, the defence failed because the member would have made the same choices anyway, which is the point on which most of these arguments turn.

One thing separates the cases that succeed from the ones that do not more reliably than anything else: a record of having asked. Where a member queried the payment at the time and was told in writing that it was correct, the defence is on much stronger ground. Where there is no such record, it usually fails. If you ever wrote to Veterans UK or Equiniti about your pension figure and received an answer, that correspondence matters.

Time limits, and why the six-year rule may not help

This is the most commonly misunderstood part, and getting it wrong leads people to relax when they should not. There are two different ways money can be taken back, and the time limits are not the same.

• Court proceedings for a debt. If a scheme sues to recover a sum, the Limitation Act applies, and proceedings must generally be brought within six years of the mistake being discovered, or of when it could reasonably have been discovered.
• Recoupment, meaning deductions from your future pension. Here the six-year bar does not apply. That was settled in Burgess v BIC UK in 2018 and confirmed by the Pensions Ombudsman, who rejected exactly this argument from a member in a published case.

Since these Armed Forces pension overpayment cases are being recovered by reducing future monthly payments rather than by court action, the second row is the one that applies. There is still a time-based argument available, the equitable idea that a scheme has delayed unreasonably, but it is vaguer and harder than a clean six-year cut-off. Anyone told that the age of the error automatically writes it off is being given false comfort.

Two narrower points that can matter a great deal

Guaranteed minimum pension is protected. Past overpayments cannot be recouped out of a member’s guaranteed minimum pension. Given that GMP problems are one of the named causes of these errors, this is worth raising specifically if your case involves one.

A disputed amount should not simply be deducted. Under section 91(6) of the Pensions Act 1995, where the amount to be repaid is in dispute, the scheme cannot use the self-help route of taking it from your future instalments unless the obligation has been made enforceable by an order of a competent court. There is a live legal argument about whether an Ombudsman determination itself counts, and the Ombudsman’s own published view is that it does. The practical point for a member is simpler: if you dispute the amount, say so formally and in writing, and do it before deductions start rather than after.

How to challenge an Armed Forces pension overpayment: IDRP, then the Ombudsman

Every occupational pension scheme has to run an Internal Dispute Resolution Procedure. The Armed Forces version is unusual, and knowing how it differs saves time.

It is a single-stage process. Most schemes run two stages, with an internal appeal if the first decision goes against you. The Armed Forces schemes do not: one review, one decision, and in the scheme’s own words “there is no appeal stage”. If you disagree with the outcome, the next step is outside the scheme entirely.

There is no waiting period to get through first. The Forces Pension Society’s position is that a member is entitled to submit an IDRP at any stage, including from the outset, so the procedure is available immediately rather than only after correspondence with Equiniti has broken down. Whether to use it that early is a judgement: going in with the calculation in hand usually makes for a stronger complaint, which is why asking for the workings comes first in the list above.

• Put it in writing, with your full name, Service Number, National Insurance number, address, contact details and your evidence.
• Send it to: Armed Forces Pension Schemes Manager, Veterans UK, Mail Point 610, Kentigern House, 65 Brown Street, Glasgow, G2 8EX, or by email to dbs-afpsi-authority@mod.gov.uk. Note that this is a different Mail Point from the general pensions enquiry address in the same building.
• Timescales: acknowledgement within five working days, and the scheme aims to decide within 60 working days. GOV.UK currently warns that because of demand it is not meeting that target, so expect longer.
• What it can and cannot cover: maladministration, a discretionary decision, or a failure to follow the scheme rules. It cannot be used to argue that a scheme rule is itself unfair. Challenges to the rules are excluded.

After that, or at any point alongside it, comes the Pensions Ombudsman. The Ombudsman can investigate, and in overpayment cases has repeatedly reduced or stopped recovery where a defence was made out. In one case the scheme was left able to recover only a small fraction of what it had claimed, with compensation awarded on top for distress. The service is free, and there is one deadline to watch: you must contact the Ombudsman within three years of the decision or action, or of becoming aware of it.

The Ombudsman cannot direct a scheme to act outside its own rules. What it can do is decide whether the scheme has behaved properly, and whether a defence against recovery succeeds.

What ministers have already said

This did not begin with the July 2026 newspaper coverage. It has now been raised in Parliament three times, and one of the answers is useful to anyone holding a letter.

On 5 November 2025, Richard Foord MP asked what was being done to improve transparency and communication in cases of alleged Armed Forces pension overpayments. Answering on 17 November for the Ministry of Defence, Louise Sandher-Jones MP set out the process and added this:

If repaying the debt poses financial difficulties, recipients are encouraged to contact the debt recovery team. In certain cases, following an individual assessment, the debt may be partially written off, or an affordable repayment plan can be arranged.

That is a minister confirming on the record, eight months before the story broke, that partial write-off is available following an individual assessment. It is not a promise to any particular person, and “in certain cases” is doing real work in that sentence. But a member who has been told the rules leave no room at all is not being told the whole picture.

The second exchange is less encouraging. On 20 February 2026 Dave Doogan MP asked how many disputes over incorrectly calculated Armed Forces pensions were being pursued and what they were worth. The answer, on 3 March, was that the information “is not held in the format requested” and that establishing it would require a manual review at disproportionate cost. Within a few months the audited annual report was carrying figures for one of the error categories.

The House of Lords, 2 September 2026, and the question of the covenant

The third and most recent occasion is the fullest. On 2 September 2026, at committee stage of the Armed Forces Bill, Lord Davies of Brixton raised the overpayments while the House was debating the scope of the Armed Forces Covenant. He declared that he had previously been a paid consultant to the Forces Pension Society and that the Society had briefed him. He put the scale at between 1,000 and 2,000 members affected, across pension sharing on divorce, early departure payments, guaranteed minimum pensions and National Insurance modifications, and said the pattern indicated “a lack of rigour in calculation, inadequate training, a lack of oversight and paucity of quality assurance”.

He gave two cases without naming the individuals. One was a 72-year-old who served 31 years in the Army and reached warrant officer class 1, facing repayment of £37,500 arising from four separate errors in the calculation of his pension. The other was a 70-year-old former RAF flight lieutenant overpaid by £32,000, who had queried the increase when he first received it and been told it was correct. That second detail matters beyond the anecdote: a member who asked at the time and was reassured has exactly the record the change of position defence above turns on. He added that there are cases with higher overpayments than either. Lord Craig of Radley supported him, saying that those being asked to repay need the system they will work under explained “rapidly and quickly”, because every day that passes they do not know what is to happen.

The two written questions asked about process and figures. Lord Davies argued from the Armed Forces Covenant, the commitment that those who serve should not be disadvantaged by that service, rather than from any claim that recovery is unlawful, and he asked the minister three specific things: to confirm the covenant applies to the operation of the pension scheme whoever is responsible, to consider writing off overpayments where the pensioner acted in good faith and the error lies with the administration, and to require future contracts to make proper provision for recovering losses from the contractors responsible.

Answering for the Ministry of Defence, Lord Coaker, Minister of State, did not take any of the three in turn. He called it “a very difficult and important issue”, noted that it “involves who has responsibility for whether it falls within the covenant”, and said this:

I know one of my ministerial colleagues is dealing with it, so I suggest that I organise a meeting to bring together the noble and gallant Lord, Lord Craig, my noble friend Lord Davies and other noble Lords who want to attend, to discuss where we are precisely with this issue so we can take that forward.

What comes of that depends on the meeting, and no date was given. The position after 2 September is therefore that the write-off question was put directly to a minister at the despatch box and was not answered either way, and the November 2025 written answer, that a debt “may be partially written off” following an individual assessment, remains the only ministerial statement on the point. For anyone holding a letter, the exchange creates no new route and alters none of the ones in this article. What it does add is the covenant argument, made by a peer on the record, which a member can cite in an Internal Dispute Resolution Procedure complaint alongside the defences set out above.

What the Forces Pension Society is arguing

The Forces Pension Society has been on this since September 2025 and has made it one of its stated priorities. Its argument is narrower than “cancel the debts”, and the distinction matters. Its chief executive, Major General Neil Marshall, has put it this way:

We recognise the principle of recovering public monies that have been overpaid. But we also think it wrong that the scheme administrator who has made the error should attempt to recover the money from members who have acted in good faith.

He has also called the episode a “failure of leadership, oversight, process and quality assurance”, and argued that “the requirement to refund the public purse should lie with Veterans UK and Equiniti”. The Society’s point about who this lands on is the one that carries: these are people “in retirement whose life plans are settled and without the wherewithal to earn money to return overpayments”.

That argument now has a parliamentary voice. The three requests Lord Davies put to the minister on 2 September follow the Society’s position closely. The third, that future contracts should make proper provision for recovering losses from the contractors responsible, takes the point the Society has been making since September 2025 and turns it into a question put to a department in Parliament. Lord Craig went further on the current contracts, telling peers it would be “extraordinary” if the contractors had no obligation whatever to correct the mistakes they had made.

There is a mechanism in the rulebook that fits a case like this, though it is a hard one. Where a group of people have all been overpaid through the same mistake, Managing Public Money says they should be treated the same way, and that an organisation minded to forgo recovery across the group must consult the Treasury first, which “will need to be satisfied that a collective waiver is defensible in the public interest or as value for money”. It then adds: “any such waivers should be exceptional.” So a collective solution is possible. It is not likely to arrive quickly, and no individual should plan around it.

Common questions

Pension Plain’s take

There is a real principle behind the recovery, and it is not a cynical one: public money paid by mistake belongs to the public, and a rule that let it be kept whenever the error was official would be a bad rule. The difficulty is what that principle does when it meets a 71-year-old whose pension was set by somebody else’s arithmetic in 2021 and who has been living on the number he was given ever since.

What stands out reading the rulebook next to the letters is how much more discretion exists on paper than most recipients will realise. Hardship can be a ground for waiver, including on mental welfare grounds. Partial write-off is on the record as available. Consistency across a group who were all hit by the same error is required, not optional. None of that is easy to invoke and none of it is a right, but a letter that presents repayment as automatic is not describing the whole of the rule it is applying.

One more thing deserves saying plainly. The error was found in November 2024 and the letters arrived in 2026. Every month of that delay made the sums larger and the change of position argument harder to run. That is not the fault of anybody who received one.

The September debate raised something the written questions never did. Everything before it treated this as a debt problem, argued on Treasury rules and the law of restitution, where the member is a recipient of public money and the question is whether recovery can be resisted. The covenant argument asks something else: whether a scheme built to reward service can, through a chain of contracts the member has no sight of and no part in, deliver a bill for another organisation’s arithmetic to someone who served 31 years. They are different questions, and the first does not settle the second. On the record so far, nothing has.

Information, not advice. This article describes the rules and processes as at 8 September 2026. It is general information, not financial or legal advice, and Pension Plain is not authorised or regulated by the Financial Conduct Authority. Whether any defence applies in a particular case depends on that case’s own facts. For free and impartial guidance, contact MoneyHelper. For questions about your own Armed Forces pension, contact Veterans UK on 0800 085 3600.

Key official sources

• HM Treasury, Managing Public Money, Annex 4.10 (losses and write-offs) and Annex 4.11 (overpayments), which contain the presumption of recovery, the five defences, the hardship waiver and the collective overpayment rules.
• Veterans UK, Internal Dispute Resolution Procedures factsheet, the single-stage AFPS complaints process, addresses and timescales.
• GOV.UK, Make a complaint about the Armed Forces Pension Scheme, the current complaints route and service-standard position.
• The Pensions Ombudsman, Recoupment of overpayment, the case study of Dr E, on the limitation point and the causation requirement in change of position.
• The Pensions Ombudsman, Recoupment in overpayment cases, on section 91(6) and the competent court question.
• UK Parliament, Written question 88382 (answered 17 November 2025), the ministerial statement that a debt may be partially written off.
• Hansard, Armed Forces Bill, House of Lords committee stage, 2 September 2026, the contracting chain, the 1,000 to 2,000 figure, the two illustrative cases, the covenant argument and the minister’s reply.
• Forces Pension Society, Overpayment of Pension Errors (advisory reissued 28 August 2026), the current version of the Society’s guidance, including the letter title, the “Complaint: NIA26” subject line for National Insurance abatement cases, and the Equiniti verification and calculation-request contacts.
• Ministry of Defence, Armed Forces Pension Scheme annual report and accounts 2025 to 2026 (HC 388), the audited source for the 323 cases and £5.1 million.

Fact-checked: 8 September 2026 · Last reviewed: 8 September 2026