Around 5,000 retired members of the armed forces have been underpaid their pensions due to a delay in upgrading an IT system managed by HP Enterprise Services.
The Ministry of Defence (MoD) said that the problem would not be solved until a new IT system was implemented in October.
“[The problems] would be solved by a change in the computer system. We are introducing a new IT system in October. It was more cost-effective to wait for the new system [rather than install a temporary fix in the meantime],” a spokesperson for the MoD said.
"The MoD and HP are working together to resolve this issue as quickly as possible."
The pensioners affected are those who have retired since April 2010, and were members of the Armed Forces Pension Scheme 75 (AFPS 75) scheme. The scheme opened in April 1975 and closed to new joiners on 6 April 2005.
It is estimated that each person has been underpaid by between £200 and £300 a year due to the error.
“Those affected will be fully reimbursed and we apologise for any inconvenience caused,” the spokesperson added.
Under the AFPS 75 scheme, members can stop working after between 16 and 22 years depending on their position, and receive an early pension with a tax-free lump sum.
Members can choose to receive a larger lump sum payment immediately by temporarily giving up, or ‘commuting’ part of the early pension.
This means that they receive a lower annual pension until they are 55, which then goes back to the original level before the commutation.
The underpayments arose because the SPVA was supposed to change the way it calculated the commuted pension from April 2010, but it chose to wait for the introduction of a new computer system in October 2011 instead.
According to the BBC, Commander Michael Goldthorpe identified the problem when he retired from the Royal Navy in 2010 after 33 years of service.
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When he started receiving his pension last September, he noticed it was about £311 a year lower than what his official pension had forecast.
Goldthorpe complained to the Service Personnel and Veterans Agency (SPVA), which runs the Armed Forces Pension Scheme (AFPS), and it admitted that there was a miscalculation due to “unforeseen delays in updating the compensation and pension system”.
He was also told that his pension forecast was inaccurate, which meant that he was underpaid by only £138 a year.
Meanwhile, the MoD has told him that employees who retired after November 2010 should have been alerted to discrepancies in their pensions by the department’s computerised pension forecasting system.
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