Preventing Pension Fraud
The information that contributors’ money under the Contributory Pension Scheme (CPS) is now N8.14 trillion calls for celebration on one hand and caution on the other.
Everyone celebrates because it is evident that contributions, returns on investments and monies from other sources of fund growth are regularly being credited to the appropriate accounts. Delayed or zero remittances can spell misery for retirees under the Scheme.
The call for caution is a matter for safeguarding the funds against fraud and loss. Doing so is part of the best worldwide practice in the pension industry, which is susceptible to attacks by cyber and financial criminals.
Cyber and financial criminals have access to ICT tools and abilities to breach even the most elaborate protective security systems and hack otherwise safe accounts to do their nefarious act.
The Pension Fund Administrators and Custodians, the National Pension Commission should constantly be alert and promptly deal with fraud, identity theft and the creation of ghost pensioners by financial criminals.
Financial crimes do happen. Nigerian banks in 2017 alone reported 26, 182 cases of fraud and forgeries to the Nigeria Deposit Insurance Corporation (NDIC). More than N12 billion of depositors’ money was involved. This is a source of lesson for the pension industry. Vigilance cannot be excessive.
The cheering news in this respect is that the Pension Transitional Arrangement Directorate (PTAD) has reported that their in-house surveillance team has detected cases of scams.
For instance, in its monthly report for June 2018 posted on its website, PTAD said documents in the FIRS record of service file of a late retiree facilitated the detection of wrong identity during verification. PTAD concluded that the person captured on its database and the person in the service file forwarded by FIRS was not of the same person. The person has been suspended from monthly pension pending the conclusion of investigation by anti-corruption agencies.
PTAD also said it received and documented 20 pension scamming cases through various detection processes and complaints by fraud victims .
In its May 2018 report, PTAD said that an ongoing fraud investigation involving a Federal auditor has led to his arrest. The Economic and Financial Crimes Commission (EFCC) is reportedly gathering evidence from his victims. The Directorate said that in all 28 pension scamming cases were documented that month.
And in April 2018 PTAD reported that a commercial bank returned N5, 640,252.86 from the account of a deceased pensioner. Although this could not be a case of fraud, it justifies regular verification of pensioners to confirm that they are still alive. The family of the deceased were not even aware his pension was still being paid.
The suspension of payment of pension to more than 24, 000 doubtful pensioners by PTAD pending concluding verification is another proof of vigilance by the Directorate, but there is no reason to relax or become complacent.
The looting of Municipal Councillors Pension Funds in South Africa as reported by Independent Online newsletter on 16 July 2018 amplifies the relevance of the call for vigilance. It was done through several fraudulent schemes.
It is significant to note that pension fund fraud does not have to be via direct cash removal. It can be by accepting lower rents on properties, paying too much for properties bought for pension funds or paying consultants excessive fees deliberately.
There is this report in Metro newspaper (https//metro. co.uk) of a “morally bankrupt” care home owner, David Barton, who was jailed for 21 years by Judge Steven Everett at Liverpool Crown Court, after he was found guilty of defrauding pensioners out of more than British Pounds 4, 000, 000. The manager of the care home, Rosemary Booth was jailed six years for her role in defrauding the elderly and wealthy pensioners they were hired to care for.
Typically, David Barton lavished the money on luxury cars and holidays leaving his elderly victims in penury.