A retired civil servant faces being forced back into full-time work after being ordered to return £25,000 in overpaid pension benefits.

Derek Ritchie, 63, was informed in March by scheme administrators that his payments had been miscalculated since 2014.

In a letter, they apologised “for any inconvenience” and told him he would need to repay £25,000 by bank transfer or in instalments.

Ritchie (not his real name) asked for an explanation that he says he did not receive. Three months later he was threatened with legal action if he did not start his refund payments.

“Over the last 11 years, I’ve made decisions, expenditures and plans based on the figures I was given and the mistake will cause me considerable hardship,” said Ritchie, who was prescribed medication for depression and anxiety following the letter in March. “I shall have to go back to work for years to pay this off.”

Ritchie is one of hundreds of civil servants who have been ordered to return overpayments caused by administrative errors. Some were told to repay six-figure sums.

“Errors and overpayments have been a feature of outsourced pension administration,” said Fran Heathcote, the general secretary of the Public and Commercial Services Union. “Civil service pension administration should be done by civil servants under direct ministerial control. When things go wrong, people suffer.”

MyCSP, which was appointed to manage civil service pensions on behalf of the Cabinet Office, admitted in 2019 that it was trying to claw back £2.7m of overpayments from more than 2,000 pensioners.

The errors had come to light during a major review ordered by the Cabinet Office. However, the review failed to spot the overpayments to Ritchie. Instead, they rose from about £200 a year to £4,000.

His income has been reduced by 13% a month and MyCSP told him it would deduct a further 15% a month to recover the debt if he agreed to a payment plan.

Pension providers have a legal duty to recover overpayments even when scheme members accept them in good faith. However, the debt may be reduced if pensioners can provide evidence that they have spent the money and would suffer significant hardship by making repayments.

Ritchie said his pension valuation encouraged him to take early retirement when his position at the Ministry of Defence came up for redundancy in 2014. He has since worked part-time as a mental healthcare assistant and had planned to retire fully in 2027.

“I might have chosen to continue my career within the ministry or opt for the redundancy deal available under the voluntary early release scheme if I’d known my income would be lower,” he said.

The Cabinet Office said it sympathised with Ritchie but had a duty to recover public money paid out in error. “We apply stringent guidelines on the recovery of overpayments, and work to ensure any money is recovered with flexibility and the least burden possible,” said a spokesperson.

In October, a parliamentary select committee report accused the Cabinet Office of mismanaging the outsourced pension scheme and blamed MyCSP for “unacceptable” service levels. The report from the public accounts committee also highlighted concerns about the transfer of the £239m management contract from MyCSP to Capita and suggested the service should instead be managed in house.

Capita took over the scheme this week. The Guardian has reported on delays with the Teachers’ Pensions scheme that it runs.

The company said: “We bring over 50 years of pensions expertise, modern technology including AI, a focus on innovation, and a commitment to social value, and are working in partnership with the Cabinet Office to build a more intuitive service that meets the needs of members.”

Ritchie said he was awaiting an explanation of how the mistake arose and had no way of knowing whether the revised figures were correct.

“Government rules say a member should be placed in the position they would have been in had an overpayment error not occurred,” he said. “Unless they are able to give me back the last 11 years and enable me to review and change my financial decisions, they’ve left me in a nightmare with no way out.”