Over one in 10 (12%) of UK pensions scheme have suffered from incidents of fraud in the last 24 months, with large schemes, (more than 10,000 members) being the worst hit, according the Baker Tilly Pensions Fraud Risk Survey.
The survey, which was conducted among over 170 trustees and pension scheme representatives, found that schemes with less than 1,000 members reported no evidence of fraudulent activities.
Additional findings include:
- 50% of respondents believed that member transactions, contributions and benefits, are the most vulnerable areas to fraud.
- 85% of respondents report that their scheme management team or trustee board has actively considered fraud risk in at least the last 24 months.
- 74% of pension schemes have taken some action to address their fraud risk.
- 66% have included fraud on their risk register and 9% have introduced a formal fraud response policy.
Ian Bell, head of pensions at Baker Tilly, said: “This should not necessarily be interpreted as smaller schemes being less susceptible to fraud. Larger schemes just tend to have more resources at their disposal and are therefore more likely to be able to detect frauds that have occurred.”
Marcus McCaffrey, partner in Baker Tilly’s forensic services, added: “One of the drivers behind fraud is opportunity. A potential fraudster has less opportunity in a smaller scheme because the trustees and/or pensions manager are far more familiar with the individual transactions that take place and so there is a higher chance of detection.
“However, the fact is that all pension schemes are exposed to the risk of fraud and that, although the size of a scheme may be relevant, all trustees need to be aware of the risk that fraud presents.”
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