UK Pension Fraud, Error Declines Slightly

The UK’s Department for Work & Pensions (DWP) has released its preliminary estimates for pension overpayments and underpayments for 2016/2017, reporting that overpayments increased slightly, while underpayments decreased.

The DWP administers welfare benefits to approximately 22 million Britons, and its annual report “Fraud and Error in the Benefit System” estimates the total amount of money to the government when claimants are paid too much, and the total amount of money lost to claimants when they are not paid enough.

According to the DWP, the total rate of overpayments increased slightly to 2.0% in 2016/2017, from 1.9% in 2015/16. The monetary value of overpayments rose to £3.5 billion ($4.5 billion) from £3.3 billion. The rate of fraud overpayments edged higher to 1.2% from 1.1% the previous year. Although it wasn’t a sharp increase, the 1.2% marks the highest-ever recorded rate. At the same time, the 0.5% rate of claimant error overpayments was the lowest recorded by the DWP. The DWP defines fraud overpayments as an intentional attempt to cheat the system, while a claimant error is considered an unintentional mistake.

The report also said that not all overpayments are lost because the DWP can recover them. During the past year, the DWP recovered £1.1 billion of overpayments, an increase of £100 million from the previous year. However, the net rate of loss from overpayments rose to £2.4 billion, from £2.2 billion last year.

The DWP found that the rate of overpayments on pension credit decreased over the past year to 5.2% from 5.3%, or to £5.8 billion from £6.2 billion, while the monetary value of overpayments decreased to £300 million from £330 million. The rate of pension credit fraud overpayments decreased, to 2.3% from 2.6%. Meanwhile, the rate of underpayments on pension credit decreased to 2.3% from 2.5%, which translates to a drop in monetary value of £130 million.

The report said that so-called “abroad fraud” continues to be the main cause of fraud overpayments. This type of fraud accounted for £50 million in 2016/2017, although this was down from £70 million last year.

“Abroad fraud” is when a claimant who is normally a resident in the UK fails to notify the DWP before leaving the country, and are abroad for a period longer than the allowable absence limit.