Pension schemes are 'wasting £250k a month paying out money to dead people'
EXCLUSIVE: An expert has found that some of the UK's largest company pensions are losing cash because they are not updating their records when someone dies.
A report has revealed that some pension schemes could be losing thousands of pounds a month due to members having died but their records not being 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."
Heywood, which looked at some of the UK's largest pension schemes and companies, is urging pension companies to make sure all their records are up to date.
It warned that inaccurate or out-of-date personal information would also affect the success of the government's planned flagship £300 million pensions dashboard project.
The pensions dashboard aims to bring all pensions data into one place so that savers can view their pensions in one place and help them track missing pensions; one of the first deadlines for its implementation is the end of April.
Heywood said basic information such as surnames and addresses were the most common areas of inaccuracy, often due to members not updating their details following major life events.
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Louise Donohue, chief operations officer at Heywood, said: “Data isn’t just a technical issue – it’s a fundamental part of delivering a positive experience for pension savers.
“Every incorrect name, outdated address, or missing record represents a potential frustration for members and an avoidable cost for schemes. Now is the time to act.”
The Pensions Policy Insitute also found that more than 1.6 million records did not have identifying features such as surnames, dates of birth or national insurance numbers.
Chris Connelly, chief strategy officer at Heywood, said: "The pensions dashboards era is upon us, and these findings confirm what we’ve long suspected – data quality will be the single biggest factor in determining the success of the project."
