The inability of the Inland Revenue's £220m computer system to recognise duplicated data has led to an overpayment of tax rebates to the tune of £50m.
The mistake arose because the National Insurance Recording System 2 (Nirs2) failed to recognise amendments made to tax returns, and treated them as separate records.
Pension holders who had contracted out of the State Earnings Pension System received higher rebates than they were entitled to over a five-year period.
A spokeswoman for the Revenue, which is now set to reclaim the money, said: "It isn't yet clear why the system failed to identify duplicate records."
She confirmed that the Association of British Insurers (ABI) and the National Association of Pension Funds were informed of the error in September.
The ABI said that it is working with the Revenue to "reach a solution which ensures that customers suffer no financial disadvantage".
Earlier this year, a software problem with Nirs2 and the Revenue's PAYE system resulted in taxpayers being overcharged by £33m.
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