Pensions fraud doubles in UK in two years, poll shows

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The share of pension schemes in the UK saying they have experienced fraud has more than doubled in 2015 from the proportion seen two years before, according to a study.

Audit firm RSM said in its ‘Pensions Fraud Risk Report’ published yesterday that 37% of pension schemes in its 2015 survey reported experience of fraud, compared with 17% in the 2013 study.

The survey polled 142 scheme trustees, secretaries and pension managers, responsible collectively for more than £40bn (€55bn) of savings.

The data was collected in September after the introduction of the pension “freedoms” by the UK government in April 2015, which allow people aged 55 and over to take their pension as a lump sum, rather than being forced to buy an annuity with most of it.

Ian Bell, head of pensions at RSM, said: “The pension freedoms introduced in April 2015 have transformed the pensions landscape for savers but also created an environment in which fraudsters see an opportunity to prey on savers’ confusion by offering questionable investment opportunities.”

He said there was a lot to do in terms of educating pensions savers, but that schemes also had to share the responsibility. 

“The reputation of the pensions industry has been tarnished by high-profile frauds in the past, and it is imperative that those responsible for safeguarding the lifetime savings of members must not allow this to happen again,” he said.

David Kirk, chairman of independent body the Fraud Advisory Panel, said the survey results showed too many pension scheme trustees, managers and administrators were failing to recognise their responsibilities properly.

“Fraud and cybercrime are now firmly part of everyday life, and we must all play our part to protect ourselves, our organisation and our members from the threat,” he said.

The survey showed transfers and other member transactions were the areas most often targeted.

RSM also said there were “worrying levels of ignorance and complacency” among some pension trustees.

It found that just over one-quarter of trustee respondents did not know that they were responsible for fraud detection and prevention systems.

Forty percent said they had not tested their internal controls within the past 12 months, RSM said, adding that this fell short of The Pensions Regulator’s recommendations.

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