Pension fraud soars as the economy dips

Private-sector pension fraud is becoming more common according to actuary firm Baker Tilly. Its 2012 Pension Fraud Risk report highlights a growing trend of schemes detecting fraudulent claims.

Last year, 12 per cent of schemes surveyed said they had been the victim of fraud. But, with the economy worsening and household budgets tightening, the percentage reporting fraud this year has risen to 19, nearly one in five of all schemes.

Of the fraud reported, one of the most common was relatives continuing to claim the pension of someone who has died. "We have to remember that these figures are only talking about fraud that has been detected and reported," says Ian Bell, the head of pensions at Baker Tilly. "Much more fraud is likely to be going on that simply isn't detected or, just as concerning, that has been detected but not reported."

Larger schemes, those with more than 10,000 members, appear to be the most vulnerable, accounting for 70 per cent of the frauds reported in the survey. But this could be due to their having more members and being more complex, and therefore exposed to greater fraud risks; or they are better at spotting fraud with greater detection resources.