Tens of thousands of Brits intentionally or accidentally commit this crime every year.
Last week, I asked an acquaintance how he was dealing with the financial affairs of his recently deceased grandfather. His answer surprised me!
Life after death
It turns out that my contact (let's call him Dave) discovered a problem buried inside his late grandad's paperwork. Dave's grandma died a few years before his grandad and -- for some unknown reason -- his grandad did not inform all of the proper authorities.
As a result, Dave's grandad continued to receive his late wife's pensions for a couple of years, until he died. When Dave informed the Department for Work and Pensions (DWP) and other pension providers of his grandad's death, he also informed them of his grandma's death earlier.
At this point, the DWP and other companies informed Dave that his grandfather -- intentionally or otherwise -- had committed benefit fraud. As a result, these organisations are now seeking the return of these overpaid pensions from Dave's grandad's estate.
We can only speculate why Dave's relative defrauded the DWP and pension companies.
As an elderly man with concentration and memory problems, he may simply have been unaware that his wife's pensions should have ceased when she did. At worst, he deliberately defrauded the government and pension companies in order to keep banking these payments. We will never know.
Big pension problems
According to the DWP, you may commit benefit fraud if you give incorrect or misleading information, or fail to report a change in your circumstances. Benefit fraud is a criminal offence and you can be prosecuted or asked to pay a penalty. Even if you do not commit fraud, any overpayments caused will have to be repaid.
Even so, pension fraud is more common than you'd expect.
With nearly 12 million pensioners in the UK, plus 7.5 million workplace pensions being paid, the scope for pension fraud is huge. This is because most pension schemes require members to confirm in writing only once a year that they are still alive.
According to one survey of private pension schemes, one in 100 spouses, partners, close relations or friends fail to inform pension schemes when members die. As a result, perhaps 110,000 people in the UK are claiming pensions for relatives who are deceased.
Consequently, the sum overpaid could exceed £200 million a year in false pension claims. In most cases, overpayments are made for only a few months, but some false claims last years.
On occasion, these frauds have come to light when Buckingham Palace staff attempt to contact 100-year-old pensioners to deliver the Queen's birthday messages, only to find that they died years before!
A gruesome betrayal
Please skip the next two paragraphs if you're squeamish!
In a high-profile case in June this year, television actress Hazel Maddock (an extra on TV soaps Brookside and Hollyoaks) and her daughter Jasmine were convicted of unlawfully preventing the burial of Hazel's 95-year-old mother, Olive Maddock. Hazel was also convicted of fraudulently obtaining her dead mother's state pension and pension credit, a total of £211.36.
On 1 July, Hazel was sentenced to 11 months in jail for leaving her mother's body unburied for up to six months. For failing to have her gran buried, Jasmine got a 26-week prison sentence, suspended for two years, plus 250 hours of unpaid community service.
Big in Japan
While pension fraud is relatively rare here in the UK, it is much more commonplace in other countries. Take Japan, a country with a population of 128 million and the world's longest life expectancy -- an average of 86 years for women and 79 for men.
Japanese citizens are famed for their longevity and dozens of the longest-lived people have been Japanese. However, with close to 48,000 centenarians (people aged 100 and over) in Japan, pension fraud is a growing problem.
In 2010, a Japan-wide audit of family registries found 230,000 Japanese centenarians were 'missing', presumed either dead or emigrated. Hundreds of these missing elderly would be over 150 years old if local records were correct. Indeed, one Japanese municipality uncovered a '186-year-old' man, allegedly born in 1824!
One reason for this peculiar problem is that some Japanese pension schemes and municipal authorities don't routinely carry out 'existence exercises' and, instead, keep paying out pensions until notified of deaths.
Bad admin
Finally, while it's easy to jump to conclusions about overpaid pensions, benefits and other payments, some British companies really don't help themselves.
It's painful enough having to sort out the affairs of deceased relatives, without the added frustration of dealing with poor customer service from banks, insurance companies and other financial firms. In many cases, dealing with a notification of death can take weeks or even months, with pension or other payments being paid throughout these delays.
In addition, firms sometimes fail to ask for this money to be refunded, which costs us all in the long run. As Homer Simpson would say, "D'oh!"
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