HOW PREVALENT IS FRAUD IN PENSION SCHEMES?
14%
81%
5%
SURVEY 2012PENSIONS FRAUD RISK SURVEY 2012HEADLINE RESULTS
Accuracy of member data is considered the most vulnerable area
of fraud
According to the National Fraud Authority, fraud costs the UK in
general an estimated 73billion every year. The Baker Tilly Pensions
Fraud Risk Survey 2012 reveals the incidence of fraud in UK pension
schemes and shows how trustees and pension managers have responded
to the risk.
Our survey shows fraud has risen sharply over the past year. In
2011s survey, 12% of respondents reported having suffered from
fraud over the previous 24 months. This year, 19% have reported
fraud over the same timeframe a 55% increase.
WHAT PRACTICAL STEPS CAN BE TAKEN TO MITIGATE THE RISKS OF
FRAUD?
CONTACT US
Trustees have a statutory responsibility to demonstrate how they
have complied with their duties of preventing and detecting
fraud.
16%of trustee respondents failed to recognise they are
responsible for the detection and prevention of fraud.
Only
7.5%of schemes have introduced a formal fraud response
policy.
35%of schemes have not tested internal controls for more than a
year.
19%
12%
+55%
2011
2012
0
5
10
15
20
2521%
15%
+40%
0
5
10
15
20
25
2011
201219% of survey respondents report having suffered from fraud
during the last 24 months a 55% rise on last year.
21% of respondents say they have not actively considered fraud
risks over the past 12 months up from 15% last year.
Almost
1/5of schemes reported some fraudulent activity within the last
two years
To your knowledge, has your scheme suffered from any form of
fraud?
Just over
20%of trustee boards have given no consideration to the threat
over the past 12 months
No Yes, in the last 12 months Yes, in the last 24 months
To your knowledge, has your scheme suffered from any form of
fraud (based on scheme size)?
No Yes, in the last 12 months Yes, in the last 24 months
96%
4%
0-1,000 members
88%
5%7%
1,000-10,000 members
30%
62%
8%
10,000 members
INTRODUCTION
Include fraud risk and related internal controls in your risk
register and regularly test the internal controls - extend the
statement in your Annual Report covering key risks and internal
controls to also consider fraud risk
1
Define your fraud risk policy and allocate responsibility
clearly to ensure that everyone (including third party service
providers) knows their obligations and how to take action
2
Consider fraud risk more regularly than at present ideally at
least twice a year in the current economic climate 3
Educate employees so that they too know how to recognise fraud,
how to report it and why it is unacceptable5
Collate information on fraud cases and ensure the warning signs
are widely recognised e.g. lack of segregation of duties, constant
breakdowns in internal controls, individuals who work long hours,
may have financial problems, or their lifestyle does not appear to
be commensurate with salary
4
Phone: 020 3201 8000Email: www.bakertilly.co.uk
Marcus McCafferyPartner, Forensic
[email protected]
Ian BellHead of [email protected]
