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Returning undue benefits




People who have received undue benefits from the Social Security will be required to return such amounts.

Those who, by action or omission, contribute towards making receipt of such pensions possible will be held responsible in a subsidiary manner, together with the beneficiary, for the return of such amounts, except in proven cases of good faith.

The obligation to return the amount of pensions unduly received will expire after four years, commencing from when the money was received, or from the time it became possible to carry out an action to demand its return, regardless of the cause of the wrongful receipt, including cases of benefit reviews due to errors made by the Management Entity.


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The procedure is regulated in |art. 146 of Law 36/2011, of 10 October, which regulates social jurisdiction (BOE 11/10):

  1. Management entities, bodies or organisms, or the Wage Guarantee Fund may not review their own decisions on rights against beneficiaries. They must, where appropriate, request a review from the competent Social Court via the relevant claim filed against the beneficiary of the recognised right.
  2. The provisions of the above section do not include the rectification of material, factual and arithmetical errors, as well as reviews caused by detecting omissions or inaccuracies in the beneficiary's statements. Reviews of decisions on unemployment protection, and termination of activity protection for self-employed workers are also excluded provided they are made within a maximum period of one year from the administrative decision or decision by the management body which has not been contested, without prejudice to the provision of art. 147.
  3. The review referred to in section 1 will expire after 4 years.
  4. The sentence declaring the review of the challenged decision will take effect immediately.

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Jurisdiction:

The Provincial Directorate of the Managing Body, the National Institute of the Social Security (INSS) or the Social Marine Institute (ISM) responsible for managing benefit payments.

Scope:

  • When the Managing Body is able to review the decision on the granting of benefits directly if omissions or inaccuracies are detected on the declarations made by beneficiaries, or when material, factual or calculation errors need to be corrected.
  • When undue benefits have been received, caused by initial pension payments for beneficiaries who have been receiving another pension simultaneously, minimum supplementary payments, pension revaluation, simultaneous benefits and maximum limits.
  • When undue benefits have been received as a result of circumstances provided for by a legal regulation that alter the legal framework of the benefit, leading to the termination or modification of the benefit. 

Exclusions:

  • Compensation between benefits for temporary disability and permanent disability, received during the same period, and between permanent disability benefits in the case of degree of disability review.
  • Undue benefits that have been received due to Unemployment.

Procedure:

When undue benefits are collected as a consequence of the review of a previously recognised benefit, and the debtor is simultaneously the creditor of economic benefits managed by the management entity that carries out the review, the corresponding discounts will be applied to these benefits in order to pay the beneficiary's debt, except if the debtor chooses to pay off the debt in a single payment.

  • Commencement:

    It is started by agreement of the Managing Body as soon as the existence of the debt is discovered. The interested party will be notified of this in order to keep them duly informed and, if they wish, so that they can appear and argue their position.

  • Instruction:

    It will be processed as a single file. Before drafting the decision proposal, there will be a hearing with the interested party granting them a 15 day period, counting from the day after the notification to submit the relevant statements or documents.

    If appropriate, at the same time there will be a notification with a proposal for debt repayment, stating the amounts to be discounted in the successive monthly benefit payments, so the interested party may declare his/her agreement to these terms, or may propose an alternative, as long as the amount of the alternative is higher than what is established for the application of discounts.

    If, at the time of drafting the repayment proposal, the Managing Body deems it necessary to extend the 5 year debt cancellation deadline in order to guarantee that the pensioner receives their non-contributory pension, it will request documentary evidence of all the income received from work or capital gains, in order to check whether the pensioner meets the requirements for the deadline extension to pay off the debt. 

  • Termination:

    Once the statements or documents have been received, or once the deadline for the interested party to argue its case has passed, a justified decision, will be made within a maximum period of 3 months, counting from the date of the agreement that started the procedure, expressly stating the following details:

    • Causes, period and amount.
    • New amount to be received and date of the economic benefits.
    • Precedence and procedure to make the return, discount amount and periods.
    • Period and management entity to which the interested party may file a prior claim.
  • When the decision is announced, the debtor will be informed of the possibility to voluntarily pay the full amount of the debt in a single period, within the 30 days following the notification. Once the payment is made, a receipt will be given to the interested party.
  • If the deadline passes and payments are not made, the fixed discounts that appear in the management entity resolution will be applied. Regardless of this, the debtor may pay voluntarily the remaining debt in a single payment at any time.
  • If the debtor files a prior claim by process of law, the Managing Body will carry out the following processes: 
    • If the claim is fully accepted and the discount has started, the discounted amounts will be paid to the interested party.
    • If the claim is only accepted in part, resulting in a debt for a different amount, the decision will offer the interested party the option to voluntarily pay the full amount of the debt in a single 10 day period, counting from the day after the notification. If this period expires and payments have not been made,  the discounts specified in the Managing Body's decision will be applied.
    • If the claim is not accepted, the discount will be applied to the benefit, if it has not already been started.
  •  If the debtor files a claim at the Employment Tribunal, the Managing Body will:
    • stop the discounts that had been applied to the interested party's benefits, if the judge's decision halts the proceedings.
    • pay the interested party the amounts that were discounted from his or her pension up to that moment, if the sentence does not confirm the debt.
    • If the sentence confirms the debt either totally or partially, the returns will be made under the terms indicated by the sentence itself. If voluntary payment of the full amount is not made, judicial debt collection procedures will begin. Where applicable, the Managing Body can beforehand grant a 10 day period to the debtor to state their agreement with maintaining the discounts. 
  • If it is not possible to apply the discount procedure or if, in the course of its application, it is not possible to continue applying discounts in order to pay off the debt in the corresponding period due to the death of the debtor, the termination of the benefit or any other cause, the Managing Body   will inform the TGSS  of the final decision on the admissibility of the repayment and state the amount pending payment, so that they can start collection proceedings.

Rules for discount application:

1.- If discounts have been applied to the successive monthly benefits that the debtor was entitled to receive in order to pay off the debt, the following percentages will be taken into account:

  •  Between 21% and 30% of the total amount of the benefit or benefits being duly received, if the amount of said benefit or benefits is greater than or equal to half of the maximum pension established at that time.
  •  Between 15% and 20%, if the amount of the benefits that are being duly received is less than half of the maximum pension, or greater than or equal to the minimum retirement pension for persons older than 65 with a dependant spouse.
  • Between 10 and 14 percent, if the amount of the benefits is less than the minimum retirement pension established in the previous paragraph.
  • These percentages may be increased if the file includes a statement from the interested party expressing agreement, and when the debtor voluntarily requests it in order to repay their debt early, once discounts have started being applied.

The amount of the benefit or benefits received by the debtor is therefore understood as referring to the gross amount.

2.- If the debtor receives more than one Social Security benefit:

  •  Discounts will be applied preferentially to the benefit that created the debt.
  • If the amount of the benefit that created the debt is less than the amount of the discount, the latter will be applied to all benefits received in proportion to its amount, guaranteeing the amount of non-contributory benefits in each one.

Debt repayment deadline:

1. When the application of the aforementioned percentages is not sufficient to repay the entire debt in a maximum period of 5 years, counting from the date the discounts came into effect, the Managing Body will increase the amount of the discounts by the amount needed to repay the debt within this period.

2.- When, after the corresponding discounts have been applied, the net amount received by the pensioner is less than the amount, calculated on an annual basis, of non-contributory retirement and disability pensions the Managing Body:

  • will extend the 5 year period for repaying the debt by the time required to guarantee, as a minimum, the amount of the non-contributory benefits, as long as the pensioner does not receive income from capital gains or personal work exceeding the income limit established to grant supplementary benefits to contributory pensions below the minimum amount. The pensioner's income from the previous year will therefore be used as a basis for the calculations.
  • If the pensioner's income were to exceed the established limit:
    • A new discount calculation will be carried out in order to repay the debt within a maximum period of 5 years, counting from the date the new decision is made, and will come into effect from the first day of the month following this date. 
    • However, if the remaining period for the debtor to pay off the debt is less than 5 years, the initial resolution will not be modified.

3.- There will be no extension to the 5 year period to pay off the debt:

If the pensioner in debt does not receive an income greater than the established limit and the gross amount of the contributory pension(s) they receive is less than or equal to the non-contributory pension amount. In this case, the Managing Body will notify the TGSS of the decision stating this fact and of the outstanding debt amount, so that it can begin the general debt collection procedure.

4.- The guarantee for non-contributory pension amounts is not applicable for persons that receive periodic benefits.

Recognition of new benefits assigned to the debtor:

  • If a new benefit is granted to a debtor who owes an amount for undue benefits and discount procedures have been applied in order to repay this amount:
    •  The previously declared debt may be paid fully or in part against the amount that should be received for the first benefit payment, taking into account the monthly amount of the new benefit at all times.
    • If there are still pending amounts to be repaid, a new calculation will be carried out, taking into account the newly granted benefit. The applicable discount may be applied to the subsequent monthly payments.
    • Upon the granting of the new benefit, the interested party will be notified of the new discount that will come into effect, so that they may make the voluntary payment of the outstanding debt, within the 30 days following the notification of the decision.
  • When, for the debt repayment, the general procedure provided for in|art.  102 of the General Regulations on the Collection of Resources for the Social Security System was being applied, the Managing Body:
    • will inform the TGSS of the granting of the new benefit, prior to issuing the corresponding decision.
    • If, in order to repay the debt, it was able to apply the discount procedure and the Treasury has not started the corresponding enforcement procedure, it will request that the Treasury stops its actions in order to apply the corresponding discounts to the new benefit, taking into account the special procedure.

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