Government-backed pension scheme Nest has recovered just £300,000 of the £1.4m lost in a mandate fraud last year, with “no realistic prospect” of the remaining funds being recouped.
Last year, Nest was forced to undertake a root and branch review of its systems after Nest Corporation, the trustee body that runs the scheme, fell victim to a scam. Details of the fraud have not been published.
Nest’s annual report and accounts, published today, reveal less than a quarter of the £1.4m has been recovered.
The report says: “We reported last year that there had been an incident of mandate fraud directed against Nest Corporation resulting in the loss of £1.4m from our operating budget. During 2013/14 we have made appropriate attempts to reduce this loss and as a result received £0.3m in May 2014. We judge there to be no realistic prospect of further monies being received.”
Nest says it has undertaken a series of initiatives in a bid to reduce the risk of fraud in the future.
“This included a Deloitte-led assessment of the design and operating effectiveness of key internal controls across Nest Corporation leading to the design of a series of improvements,” Nest says.
“The vast majority of these have been implemented with the remainder planned for 2014/15. The work included essential systems being upgraded and increased resources for key control processes. A new in-house team has been established to target financial crime prevention. This programme of work is nearing completion.
“The audit committee has maintained oversight of this programme throughout. Plans are in place to ensure that controls are reviewed regularly to provide assurance that standards are maintained and are fit for purpose.”
Nest is funded by a loan from the Department for Work and Pensions. At the end of the 2013/14 financial year the scheme owed the DWP £299m, compared with £239m at the end of 2012/13.
Nest’s accounts also reveal chief executive Tim Jones was paid between £310,000 and £315,000 during the year, with between £80,000 and £85,000 of this coming through a bonus payment.
Nest currently has around 1.3 million members and over £160m assets under management.