Fraudsters are 1,000 steps ahead of the pensions industry and will “easily” be able to exploit a combination of poor and out-of-date data with the availability of personal information on social media, an expert has warned
Fears are that they are already targeting the launch of the Pensions Dashboards Programme (PDP) which has so far cost at least £289 million. The project involves the development of 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 successfully launch the first version.
At the Pension Administration Standards Association’s (PASA) annual conference in London this week, delegates were told that the availability of public data on social media combined with a legacy of out-of-date and incorrect data could be exploited easily by fraudsters.
Lisa Lyon, managing director at pensions specialist Target, said fraudsters were “1,000 steps ahead” of the pensions industry and they were already combing over LinkedIn and Facebook for potential victims when pension dashboards go live.
Lyon explained her own experience of a data breach when a colleague was able to open a pension accoun in her name.
“The dashboard is going to see an increase in ID fraud because it presents a great opportunity to fraudsters in today’s world.”
No date has been set for the introduction of the first dashboard, expected to be the Government’s MoneyHelper version, but pension schemes and providers must have their data ready by October 31 2026.
Numerous delays have occurred with the scheme, which was originally due to launch in 2019 but was pushed back to late 2026 in July last year.
The cost of the PDP has increased by 23%, from £235m in 2020 to £289m in 2023, while the estimated gross benefits have fallen from £437m in 2022 to £413m in 2023.
Richard Smith, an independent pensions consultant, told the PASA conference that the project had the potential to revolutionise pensions. He said he had been involved in testing the MoneyHelper version of the dashboard.
He said he had seen financially vulnerable people moved to tears when they realised they had more pension money.
He said: “People are terrified of the future but when they see a simple display there is visceral reaction. It is ‘this is fantastic when can I have it’.
Smith urged the pension industry to try and launch projects as soon as possible. He said: “Only when you launch will you realise what you need to do to refine it.”
Earlier this month the Daily Express revealed how poor data meant some pension schemes could be losing thousands of pounds a month.
Poor and out-of-date data meant pensions were still being paid to members who had died, as their records were not 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.”
