Expat families and loved ones continuing to claim someone’s pension once they have died is one of the biggest scams facing pension providers.
Financial firms say bogus claimants are their biggest security threat to private pensions.
No official figures back the claim, but the UK’s National Fraud Initiative published figures relating to the scam in the public sector.
They revealed that failing to report the death of a pensioner led to fraudulent public sector pension payments of more than £11.4 million between April 2014 and March 2016.
Identifying fraudsters saved the Treasury another £85 million in scam claims.
Retiring overseas is key fraud driver
In research examining crime threats to pensions compiled by The RSM Pensions Fraud Risk Report disclosed the scam accounted for around 39% of detected fraud.
“Pensioner existence fraud continues to be the top fraud event. The growing ability and willingness of over-55s to retire overseas is a key driver,” says the report.
“Once a member leaves the UK it becomes more challenging for schemes to keep up with changes to circumstances. While families have a responsibility to report a pensioner death, experience shows this is not always carried out.
“As schemes mature and more members relocate overseas, it is more important than ever that trustees and pension providers keep pensioner existence fraud on their radar.”
The next largest pension fraud problem is pension liberation transfers.
Danger of cybercrime and pension liberation
Pension schemes say the number of suspicious transfer requests is rising and 35% of all frauds relate to liberation cases.
Chancellor Phillip Hammond stated 11 million retirement savers are targeted each year by scammers and £19 million was stolen from savers between April 2015 and March 2016.
“Trustees cannot block transfer requests. Even if fraudulent activity is suspected, their only option is to ensure members have the necessary guidance and information to reach a confident and appropriate decision,” says the report.
The report also warns cybercrime is a growing danger to pension schemes as hackers become more sophisticated.
“As the public becomes increasingly sensitive to how companies use their personal data, it is more important than ever that the sector protects member information,” says the report.
