Bereaved relatives have been asked to repay state pensions that were wrongly sent to people who have died by the Department for Work and Pensions (DWP).

The DWP has confirmed it has no legal right to reclaim the money but argues that it does so to protect public funds.

Former Pensions Minister Sir Steve Webb says the letter the department sends out to families does not make it clear the repayments are voluntary.

Over the past five years, the DWP mistakenly paid more than £500m in state pensions and pension credits to the deceased, recovering about half from bereaved relatives.

This situation can arise if there is a delay in reporting a death – or in the DWP processing it – causing further pension payments to be issued.

As a result, part of that payment may cover a period after the person has died.

In the latest year, £144m was overpaid in state pensions by the DWP after a person’s death due to delayed reporting.

The department recovered £67.3m, leaving £76.7m in unrecovered overpayments.

Sir Steve, who is a partner at pensions consultancy LCP, used a Freedom of Information request to see a copy of the letter the DWP sends out to families and executors.

It revealed that while the department asks for the money to be returned to protect public funds, it does not state that repayment is voluntary.

‘Consistent approach’ needed

The former minister said he was “shocked” to learn the letter does not clarify that returning the money isn’t mandatory.

Sir Steve argued that this turns pension repayments into a “lottery” where some people send the money back while others don’t.

The former Liberal Democrat politician, who served in the ministry between 2010 and 2015, warned the system disproportionately affects the most vulnerable, who may be grieving and unable to question the letter.

He called for a “consistent approach”, urging the government either to secure a legal basis for recovering overpayments or stop benefiting from “people who don’t know how this system works”.

Radio 4 Money Box listener Dennis said he had been “caught out” by the procedure twice, after both of his parents passed away.

Dennis explained that he followed the letter’s instructions to “settle all” his parents’ affairs.

He added that he “obeys the government and will pay it” as he didn’t know the repayment was not legally required.

Another Money Box listener, Jan, told the BBC that her late husband would be “absolutely beside himself” if he knew that over £250 of his pension had been paid back when it didn’t need to be.

Jan said she was confused when she received a letter from the DWP stating her husband had been overpaid, as she had informed them “immediately” after his death.

“It was upsetting the way it happened and [the way] the whole thing played out,” she said.

The Department for Work and Pensions said in a statement: “It is not our intention to cause distress, however, we have a responsibility to taxpayers to recover overpayments. We acknowledge this is not always possible.

“Whilst there is no legal obligation to repay a debt of this type, we recognise some people will be willing to repay money to which there was no entitlement. We provide full contact details and encourage anyone with concerns to call us.”