Pension fraud cases ‘significantly’ increased, reveals NFI

Pension fraud

The NFI recorded a 89 per cent recovery rate for pension fraud, with £8.3m of the £9.3m in fraud identified recovered

The number and value of pension fraud cases has significantly increased, with £250 in pension fraud and overpayments recorded between 2020 and 2022, according to the National Fraud Initiative’s (NFI) latest report.

The update showed that pension fraud and overpayments made up the majority of fraud identified by the NFI in England, representing £250m of the £416.8m fraud identified in the period from 5 April 2020 to 31 March 2022, up from £55m in 2018/19.

Of this, £248.3m related to mortality screening matches, as reported by 86 participants, with three large public sector pension schemes contributing £225.3m of this across 10,476 cases.

According to the report, the majority of these new cases can be attributed to the work of one large public sector scheme, which has been looking to secure a breakdown of overpayments relating to investigations from 2018/19 and 2020/21.

Indeed, this work represented £205.1m, or 7,255 cases, reported in 2020/21, 64.9 per cent of which related to pensioners that were aged 85 or over, while 20.7 per cent were aged between 84 and 70 and 14.4 per cent aged under 70.

However, the report confirmed that this scheme has been undertaking bespoke monthly screening since January 2022, which is expected to alert them to deaths earlier, supporting them in reducing the amounts overpaid going forward.

NFI suggested that it may also look to make this tool available more widely in future, if this work proves successful.

Alongside this work, the NFI said that the introduction of an automated method of recording outcomes for mortality screening matches has simplified the process for large schemes, and could have impacted on the increase in the number of cases recorded.

The NFI recorded a 89 per cent recovery rate for pension fraud, with £8.3m of the £9.3m in fraud identified recovered.

More broadly, the NFI emphasised that it was ‘heavily impacted’ by the demands placed on the public and private sector participants during the pandemic, explaining that resources usually allocated to the investigation of NFI matches were diverted into other areas.

However, the NFI argued that it has continued to deliver despite these challenges, including securing a one-off ‘windfall’ of £205m from Civil Service Pensions which use the NFI pension mortality screening service.

We anticipate that the amount of fraud prevented and detected through the NFI will return to previous levels from 2022 onward, Paymaster General and Minister for the Cabinet Office, Jeremy Quin, stated in the foreword.

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