Pensions could be losing thousands with fears of fraud and payments to dead people | Personal Finance | Finance

A report has revealed that some pension schemes could be losing thousands of pounds a month due to members having died but their records not being updated. Heywood, a technology provider which works with UK pension companies, said of the three million pension records it analysed 2% of members in its sample were “deceased but not recorded”, and estimated that this was costing schemes more than £250,000 per 10,000 members per month.

The report said: “Paying benefits to this share of pensionable members who have died would cost a scheme over £250,000 each month per 10,000 members, based on an average monthly payment of £1,100. Never mind the increasing fraud, regulatory and reputational risks.”

The Pensions Regulator (TPR) said it was concerned that one in four pensions still held data in a “non-digital format” and that action needed to be taken. The TPR’s warning comes as the pensions industry gears up for the launch of the Pensions Dashboards Programme (PDP), which has so far cost £289 million and which some insiders fear is already being targeted by fraudsters.

A report out earlier last month [March] also estimated that of-date data is costing pensions £250,000 per 10,000 in £1,100 paid on average each month to a dead person.

The dashboard project involves developing an online tool where savers can see all their pensions in one place. However, questions have been raised about the quality of pension industry data and the security needed to launch the first version successfully.

A TPR spokesperson said: “We are engaging with schemes that fall short of our expectations, and where needed, we will take enforcement action to drive compliance.” This matters because poor data can cause problems for pension savers and can also create costs for schemes in fixing issues.”