Government-backed pension scheme Nest has revealed it was the victim of a £1.4m fraud.
News of a “single fraudulent attack” against Nest Corporation, the trustee body which runs Nest, appeared in its annual report and accounts, published this week.
Nest says no member funds were impacted and it undertook a “root and branch review” of its systems following the incident, which occurred towards the end of last year.
Nest chief executive Tim Jones says he will not take any bonus for 2012/13 in light of the fraud.
Details of the fraud, involving the “diversion of a supplier payment”, remain unclear with a police investigation ongoing.
Jones says: “I am very disappointed to have to report that Nest lost £1.4m in 2012/13 from a single fraudulent attack, involving the diversion of a supplier payment.
“On learning of this, I moved immediately to close down our exposure to any further attack of this nature and we promptly informed the DWP, police and relevant regulatory authorities.
“A series of actions to seek recovery of the monies, tighten our controls framework and review business processes across Nest Corporation have been undertaken.”
Nest’s accounts also reveal a 40 per cent increase in the loan it receives from the Government, from £171m at March 2012 to £239m a year later.
Tim Cox, a pensions specialist at law firm Linklaters, says The Pensions Regulator is unlikely to take action against Nest.
He says: “Provided Nest has dealt with the problem I think the regulator will stop short of taking any further action. Its interest is in whether members have been affected and, if they have not, then that will be the end of the matter.”
A spokeswoman for The Pensions Regulator says: “Nest notified The Pensions Regulator that it had been the victim of a fraud. We continue to liaise with them in respect of their response to the incident.
“We do not have further comment on the specifics of the case, which is subject to an ongoing police investigation.”
Worldwide Financial Planning IFA Nick McBreen says: “In the current regulatory climate, there is a huge focus on controls and checks and processes, so it is hugely concerning that a scheme of Nest’s scale and importance could fail so badly. Nest’s systems should be impregnable.”