Pension funds must protect members from cyber security threats as the number of pension fraudsters rises.

The number of people being targeted by scams has risen since the introduction of pension freedoms earlier this year.

Research from employment benefits consultancy Portus, found that 14% of working over-55s believe they have been targeted by a pension scheme scam since April.

The figures reveal that 24% of the scams involved being offered other products to invest pension savings in, without explaining what they were, while 69% said the suspected fraudsters tried to access their funds by offering a 'free' pensions review.

More than a quarter (27%) said the suspected scam involved being offered an 'exotic' investment scheme promising attractive levels of return.

Steve Watson, consulting commercial director at Portus, said more needs to be done to educate people about pension scammers and catch and deter the criminals responsible.

He said: "The amount of money savers lost to pension scammers between April and August this year was just over ?9 million, which is around twice as much as the same period in 2014.

"However, these figures could be just the tip of the iceberg because our research shows that many people don't report the fact that they have been targeted."

Portus' research reveals that 52% of people aged 55 and over who have been approached have been targeted once by pension scammers since April, but 35% say they have been approached up to five times while 13% have been approached more than five times.

The most common way used by potential scammers to contact over-55s is by email cited by 36% of people who believe they have been targeted. This is followed by phone (33%) and post (28%).

The results back recent ONS statistics, which indicated there were an estimated 2.5million incidents of crime under the Computer Misuse Act in England and Wales between May and August 2015.
Pension funds are particularly vulnerable to attack because of the valuable data they own concerning their members.

Pensions data management and software firm Veratta says pension scheme providers must adopt a "future proofing" approach to cyber security to make sure members are safeguarded.

Veratta chief operating officer Monica Cope, said: "The pensions industry is certainly not immune to the threat of cyber-crime and, without more rigorous controls, particularly around processes and technology, there is an incident waiting to happen.

"Pensions data is extremely valuable – it's people identities, whereabouts and financial circumstance so as an industry we therefore need to take the lead and demonstrate that we are treating people's information and security just as seriously as other industries do."

Cope urged trustees to consider things like penetration tests to analyse any hacking and security vulnerabilities, and ensure that software is always updated with the latest patches and that backups are regularly done.

First published 29.10.2015

Lindsay.sharman@wilmingtonplc.com