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Government does not expect to collect all pension overpayments, says Ross Wiseman

04/08/2015 07:11 EDT | Updated 06/08/2015 05:59 EDT
A Newfoundland and Labrador government pledge to be fair and understanding to recipients of pension overpayments over the last two decades will likely mean not all of the nearly $1 million will be collected, says Finance Minister Ross Wiseman.

In an interview Wednesday with CBC's St. John's Morning Show, Wiseman emphasized that the province has a legal obligation to try to recoup the roughly $935,000 paid out in error to nearly 430 public-service pensioners.

"This is a circumstance here where we're trying to balance our legal obligation to the pension plan with our responsibility to the individual who are impacted here to be patient with them, understanding, and make an arrangement that's reflective of their individual circumstance," Wiseman said.

He said the money belongs to the public-sector pension plan, not the provincial government.

But the government has said it will not impose undue financial hardship on pensioners, or force them into situations where they may have to sell their homes or make other difficult lifestyle decisions.

As well, many of the pensioners are in their twilight years, prompting Wiseman to acknowledge that many will "probably not repay that full amount."

He also stressed that the government won't go after the pensioners' estates.

Wiseman announced April 1 that "clerical errors" discovered during an internal audit, were to blame for the overpayments, which date back to the mid-1990s.

In the vast majority of cases, pensioners were overpaid by less than $300, but in some extreme cases, the total per person exceeds $50,000.

The government has said it will forgive any overpayments made up to 10 years ago, and also announced a series of other measures to ease the burden, including limiting repayments to a maximum of 15 per cent of a person's income.

And if, for example, a pensioner was receiving overpayments for a decade, he or she will be given twice that amount of time to pay back the money.

A portion will likely be written off

The government has received criticism in recent days for saying it will attempt to recover the money from pensioners on fixed incomes. Many live on limited means. 

Some have suggested the government should write off the money and use public funds to replenish the pension plan.

It's not uncommon for the government to write off bad debts, but Wiseman said that only occurs after every effort is made to collect the money.

"That sort of circumstance may happen here," said Wiseman.

When asked if there's a worry the issue may hurt the governing Progressive Conservatives in the upcoming general election, Wiseman said that will be up to voters.

However, he added: "If every time we made a decision we had to say, well, what will this look like on an election day, well, we would never be able to do anything."

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