The Pensions Regulator has warned that the recession may be putting pressure on the pensions scheme making it more prone to be at risk from fraud, dishonesty and risky behaviour from employers.

It is asking that trustees, advisors and members to use their powers to tip off anything that may be considered fraudulent.

They also say that though fraud and dishonesty are unlikely in this situation, it is still a risk and therefore people should be aware of employers trying to abuse the pensions scheme.

Joanne Segars of the National Association of Pension Funds (NAPF) said: “It is important to make clear that the vast majority of schemes are well run by dedicated managers and trustees working on behalf of members.”

Dishonesty Could Jeopardise Peoples Benefits

The regulator’s chief executive has also said that he wants to hear from people that can give any information about this that may be suspect. He said: “The economic downturn may accentuate the vulnerability of some schemes to certain actions which give us cause for concern.

“We encourage all those who might be aware of behaviour that would give cause for concern to contact us.”

The TUC have welcomed the announcement saying that “this is a helpful reminder that those involved in running pensions should remain alert to the potential for rare cases of fraud or dishonesty that could jeopardise members’ benefits.”

The regulator’s alert has highlighted two particular areas of concern: “scheme members may be targeted to access their pension assets through trust-busting or pension liberation activities.”

Increase in Fraudulent Claims

It also gives some potential examples of employers that play fast and lose their pension schemes, including “avoidance of employer debt, inappropriate transfer for individuals from under-funded schemes that would not subsequently have the resources or adequate employer support, as well as employer-related self-investment and poor practice associated with transfer incentive exercises.”

The regulators spokesman said that there had been a slight increase in examples of people reporting breaches in the pensions laws in the past financial year: “there has been a marginal increase in the number of whistle blowing cases reported.”

Just a couple of months ago the regulator warned employers not to use the recession as an excuse to cut pension contributions if they could pay dividends to shareholders, after it had already warned that pension scheme finances were being undermined by falling investment returns and higher risks of employers going bust.

From the law firm Sackers, Peter Murphy said: “unusually, the regulator specifically refers to the possibility of dishonesty and fraud affecting pension schemes.”

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