Thousands of public sector pensioners, including retired NHS staff and ex-soldiers, face a bleak New Year as the government slashes decades of over-payments, following a blunder by the government paymaster agency, Xafinity.
The cabinet office is due to make a statement tomorrow after the disaster facing pensioners was revealed by LibDem treasury spokesman, Vince Cable.
The agency has been paying the public sector pensioners too much for years but Chancellor Alistair Darling, said the claw-back would not be retrospective and, instead, it will be taken from future payments.
Cable said he had been told to keep quiet until pensioners could be notified. The extent of the sums involved is not clear but is reported to run into tens of millions of pounds.
Cable said he had been told Xafinity Paymaster, which pays out public sector pensions, had been making "excessive" payments. He had been alerted to the problem 10 days ago but had been asked by the head of the civil service not to publicise it for a few days to give the government time to notify pensioners.
The BBC reports, Cable asked Darling in the commons how many people were involved, how much money was involved and what steps would be taken to retrieve the overpayments, "which I understand in some cases go back decades and are potentially enormous".
Xafinity Paymaster is one of the largest providers of outsourced financial services in the UK.
According to its website, the company manages the accounts, administration, payroll and banking services for over 1,100 public sector customers and primary care trusts and various non-departmental public bodies.
Current clients include the treasury, the mineworkers pension scheme, NHS business services authority, the Police and the forces service personnel and veterans agency (SPVA).