The Pensions Ombudsman (TPO) has said that it is “disappointed” by the recent Court of Appeal ruling that it was not a ‘competent court’, confirming that it is working on legislation with the Department for Work and Pensions (DWP) to clarify the situation.

The Court of Appeal ruling previously deemed that TPO was not a 'competent court' for the purposes of concluding overpayment disputes where recoupment is sought, meaning that TPO's determination alone is not sufficient for a pension scheme to recoup overpayments.

However, TPO said that it was granted powers to handle overpayment disputes and determine the terms of overpayment recovery by Parliament, with final binding determinations being subject only to an appeal on a point of law.

It also confirmed that, in response to the ruling, DWP is supporting legislative changes to formally empower TPO to bring an outstanding overpayment dispute to an end without the need for a County Court order.

In the meantime though, TPO admitted that the ruling will present an additional hurdle for trustees, members and TPO, as it is very rare for any of its determinations to require enforcement in the County Court.

However, it confirmed that it has been working with stakeholders from across the sector to review the management of overpayment disputes, in order to minimise the additional time and cost burden that has been added to the process.

The ombudsman also shared a factsheet to provide guidance on how overpayment disputes should be managed, stating that, in practice, it is hoped that this additional step should not prove unduly burdensome, as the County Court is only acting to enforce TPO's determination, and not reconsider the merits of the complaint.

The factsheet was shared alongside the ombudsman's first overpayment determination following the Court of Appeal ruling, in which TPO partly upheld a complaint against the AECOM Pension Trustee Limited on the grounds that it should not have commenced the recovery of the overpayment without an order of a competent court.

The complainant in the case, Mr Y, raised concerns after the trustee said that his pension had been calculated incorrectly when he retired in July 2011, with his pension reduced and a plan put in place to recover the amount of pension that the scheme claims was overpaid.

Whilst the ombudsman agreed that, as a matter of law, the trustee acted correctly in seeking to recover the overpayment in this case, the trustee should not have commenced the recovery of the overpayments without an order of a competent court.

The ombudsman, Dominic Harris, also confirmed that the AECOM Pension Trustee will need to apply to the county court for an order authorising it to commence recoupment .

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