The Oxford University Press pension scheme has volunteered to take part in the Cabinet Office’s National Fraud Initiative data matching exercise to help detect and prevent benefit fraud.
Protecting members from scams is a major concern for trustees, but the possibility of a scheme being susceptible to fraudulent benefit claims is equally undesirable.
In a digital age, potential data fraud should be on the risk register for any well-run scheme
Rod Bryson, Capgemini Consulting
“Our participation in NFI will assist in the prevention and detection of fraud against OUP and organisations within the public sector,” the scheme told members.
“We will participate on a voluntary basis and provide the Minister for the Cabinet Office with particular sets of data for matching,” it said.
Triggering investigations
Data matching involves comparing computer records, such as the benefits records of an organisation, against other data held by the same or a different body.
The scheme explained that this allows fraudulent claims and payments to be identified. It said: "Where a match is found it may indicate that there is an inconsistency which requires further investigation.”
Organisations within the public sector, including pension authorities, county councils and NHS trusts, are required to provide data. Other bodies, including private sector pension funds such as the Oxford University Press scheme, can participate on a voluntary basis.
Innovative ways of fighting fraud
Tim Middleton, technical consultant at the Pensions Management Institute, said more schemes might want to go down that route in coming years. “I would expect this to become more common in future,” he said.
He noted that this could be an example of schemes trying new ways to make sure they do not become the target of benefit fraud.
“Historically schemes have done all sorts of checks to make sure that benefits are going to people that they should be going to,” Middleton said.
However, “these days, the sorts of checks that schemes do are more sophisticated”.
Middleton said that such measures are "all about best practice”, and can be particularly important for very large schemes because having many members may mean it is difficult to keep track of who is receiving benefits.
“This is a good initiative, and it’s certainly one that I think is going to become more popular with pension schemes,” he said.
Pension scams are not new
There are prominent campaigns to raise awareness of pension scams and pension liberation, said Mike Crowe, trustee representative at Dalriada Trustees.
Plenty of information and guidance is also available to trustees to help them protect members against these risks.
Fraudulent activity in terms of benefit claims “has always been there”, he said.
One example is where a member who has been receiving a pension dies, and those close to the deceased might deliberately not notify the scheme. Instead, they might continue to collect the retirement benefits, despite not being entitled to them.
“That’s probably one of the most prevalent scams,” said Crowe, adding that it is one which has "always been around".
In the past, “the counter to that was to have really robust pensioner existence exercises to make sure that you’re regularly checking that the person is still alive”, he said.
Other scams relate to cyber security. “That’s really one of the things that is becoming more interesting, and trustees really have to be aware of [it],” Crowe said.
Schemes need to have very strong data security processes in place to prevent valuable data being attacked, he warned.
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Trustee boards should be assessing their risk of cyber attack and taking steps to protect member data and scheme assets, the chief executive of the Pensions Regulator has said.
Demonstrating awareness to deter fraudsters
Crowe said he does not see why more schemes should not get involved in data matching exercises, and that any initiatives they can take with centralised bodies should be seen as positive for members.
Uptick in scams prompts call for tighter regulation
A recent increase in reports of suspected pension scams has been called “the tip of the iceberg”, as experts said tighter legislation would help ensure people do not lose hard-earned retirement savings.
It is prudent not only to make sure schemes are secure and safe, but to communicate to members that the trustees are being proactive in doing so, he said.
He said that demonstrating "a very aware attitude” of cyber security and false benefit claims could also help to deter any potential fraudsters.
Rod Bryson, principal of wealth, long-term savings and insurance at Capgemini Consulting, said that "in a digital age, potential data fraud should be on the risk register for any well-run scheme".
He added: “It’s easy to think fraud will never happen in your scheme, but it only takes one incident to have a significant impact on the overall scheme financials, and in the worst case can impact member benefits."
