Police called to investigate 'significant potential fraud' over £300,000 payments to dead pensioner
The council administers the Strathclyde Pension Fund which has 250,000 members who worked for 12 councils including Glasgow.
The fund’s total worth adds up to around £20 billion.
The local authority noticed the discrepancy in its newly published annual accounts.
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Hide AdThe fraud was uncovered in February when returned mail from the intended recipient arrived with the council, as reported by The Herald.
It is understood the initial claimant is long dead and that another family member has been collecting the pension since the 1990s.
Since this discovery, internal auditors have cut the pension off.
Pension fraud is not an uncommon practice, most commonly done via relatives withdrawing money from bank accounts and neglecting to inform the pension authorities of the recipient's death.
The significance of this case lies in the massive total, the average amount of money involved with these cases usually is around £32,000, as the fraudster is caught relatively quickly.
Recent efforts have been made to deal with this issue, with a £2.2m drop in this type of fraud since 2016/17 in Scotland.
The Scottish Public Pensions Agency also carries out twice-yearly “mortality screenings”, cross-referencing payments against death records.
In this case however, the claimant's death pre-dated the current checking system.
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Hide AdIn its unaudited accounts for 2020/21, Glasgow City Council stated: “In February 2021, the Strathclyde Pension Fund Office became aware of a significant potential fraud that had occurred over a lengthy timeframe.
“Internal Audit were promptly informed and the matter was investigated. It has been confirmed that a pension had continued to be paid to a deceased pensioner to the value of circa £300,000.
“The Strathclyde Pension Fund Office was not notified of the pensioner’s death, which pre-dated current data matching controls.
“On uncovering the overpayment, immediate action was taken to stop all future pension payments. Internal Audit reported the potential fraud to Police Scotland who are reviewing the case.
“In the meantime, work is ongoing between Internal Audit and officers within the Strathclyde Pension Fund to ensure there are no other similar cases and to determine what further controls, if any, can be put in place.”
It is understood it is unlikely the fraudulent money will be reclaimed, as it has most likely been spent.
The Strathclyde Pension Fund is one of the 20 largest UK funds and one of the top 50 European pension funds.
A spokesman for Strathclyde Pension Fund, speaking to The Herald, said: “Families not disclosing that a member has died, whether deliberately or not, has always been one of the classic risks for any pension fund.
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Hide Ad“Unlike paying a salary to an employee, you do not expect to regularly see or hear from those drawing their pension after retirement.
“Modern data-matching, through the National Fraud Initiative, has greatly reduced that risk – however, this case predates the introduction of those controls.”
A police spokesman told The Scotsman today that the case is currently being dealt with by their audit team, which was flagged up in their recent governance statement.