Over a third of pension schemes have reported experience of fraud in a 2015 survey conducted by audit firm RSM, more than double the proportion recorded in 2013.
The RSM Pensions Fraud Risk Report, published today, reveals that the proportion of schemes reporting experience of fraud has risen from 17 per cent in 2013 to 37 per cent in 2015.
The survey, carried out among 142 scheme trustees, secretaries and pension managers, collectively responsible for more than £40bn of members’ savings, took place in September 2015 following the introduction of the pensions freedom reforms in April 2015.
For those respondents who have experienced fraud, transfers and other member transactions are the areas most often targeted by fraudsters.
Almost 60 per cent of respondents said that pension scams pose the greatest threat and over half said they have identified requests for member transactions suspected of being scams.
The survey also points to worrying levels of ignorance and complacency among some pension trustees. Just over a quarter of trustee respondents do not know they themselves are responsible for fraud detection and prevention systems, and 40 per cent said they have not tested their internal controls within the past 12 months, in breach of The Pensions Regulator’s recommendations.
Third-party administered schemes were found to have tested controls least regularly at the same time appearing to suffer the most fraud.
Ian Bell, RSM’s Head of Pensions 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.
‘Clearly there is much to be done in terms of educating pensions savers, but schemes also have 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. Trustees need to recognise their responsibilities and act to ensure risks are kept to an absolute minimum.’
Commenting on the report, David Kirk, Chairman of the Fraud Advisory Panel said:
‘Never has the need been greater for pension scheme trustees, managers and administrators to take action to stem the rising tide of fraud within the sector. Yet the results from the latest RSM survey show that too many are still failing to properly recognise the responsibilities to manage the risk of fraud within their schemes. 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. Nothing less than a concerted effort by both public and private sectors will do.’