Fraudsters Steal £6 Billion Per Year From Pension Sector
The pension sector is losing an estimated £6 billion each year to fraud.
When broken down, private pensions are losing £4.9 billion each year whilst public and government pensions are losing £1.1 billion according to ‘The Estimate of the Annual Cost of Fraud Affecting UK Pensions’ report Crowe and the University of Portsmouth Centre for Counter Fraud Studies.
Worryingly, Crowe found that over a quarter of pension schemes surveyed did not put policies and approaches in place to deal with cyber crime.
Only a third of those surveyed had received training on cyber crime and how to protect the company’s sensitive data and money.
2.31 per cent of state pension credit is lost to fraud with £120 million of the £5 billion credit stolen by fraudsters.
Whilst only 0.10 per cent of private pension investments were lost to fraud last year, this equated to 2.8 billion.
Private pension payments and Government and Public sector pensions also lost over a billion pounds with losses of £1.1 billion and £1.6 billion respectively.
When pension savings, which are already considerably below what is needed for the average person, are losing £6.171 billion per year, it is clear that both private and government investors need to find more ways of protecting this vital source of income for later life.
The report suggests that the Financial Conduct Authority (FCA) should offer more proactive guidance and solutions to help the industry from falling foul of fraud.
Jim Gee, Crowe’s partner and head of counter fraud, commented:
“Fraud is a pernicious problem with clear economic effects: private companies are less financially healthy, public service quality is reduced, individuals suffer, and charities are deprived of valuable resources. Fraud has a serious and detrimental impact on the quality of life across every sector and region of the country.
“In respect of pensions, fraud undermines the value of income for people at a crucial time of life when sources of income are more limited, and the chances of financial recovery are reduced.
“It is time for the industry to review whether it is doing enough. Think of the extensive protection the banking sector places around comparatively small sums held in current accounts versus the less extensive protection around much larger sums in pension pots. This simply does not add up.”