Pensions sector loses £6 billion per year to fraud
The UK pensions sector is losing almost £6 billion a year to fraud and scams, according to research from the University of Portsmouth’s Centre for Counter Fraud Studies.
The private pension sector is worst hit, with losses estimated at £4.9 billion per annum. The largest cause of loss is investment fraud, at £2.88 billion each year, with payment fraud costing £1.68 billion. An additional £330 million is lost to payroll and purchasing fraud.
Government and public sector pensions are estimated to lose £1.1 billion per year.
The research identified the chief risks to the sector as internal fraud, identity fraud and cybercrime. The pensions sector is particularly vulnerable to cybercrime. With the research showing that 25% of schemes surveyed did not have plans in place to respond to cyber threats.
The pensions sector remains at critical risk to fraud. Given the scale, sum and diversity of investments pension schemes are responsible for, according to the research. The situation is made worse because counter fraud and cybercrime processes are ‘not yet fully adapted to the rapidly evolving threats’, it added.
Pensioners and prospective pension beneficiaries – who tend to have low levels of engagement with their retirement savings and finances – are also regarded by fraudsters as easy targets.