Pension Fraud Risks: Understanding Fraud Typologies

The wider threat environment illustrates the scale of the challenge. Research from our latest LexisNexis® Risk Solutions Cybercrime Report found global attack rates increased by 8%, bot attacks rose by 59%, login attacks increased by 89%, and attack volumes targeting desktop browsers doubled year-on-year. Password reset journeys also experienced a 6.6% attack rate, highlighting how cybercriminals are increasingly targeting points of trust within digital customer journeys.

For pension schemes, the stakes could not be higher. These aren't just accounts or balances, they represent decades of hard work, careful planning and, ultimately, an individual's financial future. A successful fraud attack can put an entire pension pot at risk, potentially devastating retirement plans and causing significant emotional distress. Understanding fraud typologies has never been more important.

The Evolution of Pension Fraud

Fraud in pensions is no longer limited to forged paperwork or attempts to persuade members to transfer funds into fraudulent investments.

As discussed during the Professional Pensions webinar Fraud & Identity in the Pensions Industry, schemes are increasingly facing a broader range of threats including digital account takeover, synthetic identities, deepfakes, AI-generated impersonation techniques, identity theft and scams. These threats often work together rather than existing in isolation, creating a more complex fraud ecosystem than many schemes have historically encountered.

At the same time, pension providers face a difficult balancing act. Members expect the convenience and accessibility of digital services, yet schemes must ensure they maintain robust protections around access, authentication and transactions. Removing too much friction can increase risk, while introducing excessive controls can negatively affect member experience.

First-Party Fraud: The Growing Hidden Threat

When people think about fraud, they often picture an external criminal attempting to gain unauthorised access to an account. However, first-party fraud is becoming an increasingly significant issue across many industries.

First-party fraud occurs when a genuine customer, member or account holder knowingly misrepresents information or intentionally manipulates a process for personal gain.

While first-party fraud can manifest differently across sectors, within pensions it may include the deliberate misuse of scheme processes, misrepresentation of circumstances, abuse of identity controls or the manipulation of information to circumvent security measures.

What's particularly notable is that industry data now suggests first-party fraud has become one of the most prevalent fraud categories globally. Our research found that nearly two in five fraud cases are now classified as first-party fraud, making it more than twice as common as any other individual fraud category in that dataset.

This represents a significant shift in thinking. Historically, many fraud defences have focused on identifying external attackers. Increasingly, organisations must also consider situations where the individual interacting with them may be genuine, but their intentions are not.

For pension providers, this means looking beyond traditional identity verification and considering behavioural indicators, anomalies and broader risk signals throughout the customer journey.

Third-Party Fraud: When Criminals Become the Member

Third-party fraud remains one of the most significant threats facing pension schemes.

Unlike first-party fraud, third-party fraud involves an external criminal attempting to impersonate or exploit a legitimate member in order to gain unauthorised access to data, services or funds.

The Pensions Regulator (TPR) has highlighted growing concerns around impersonation fraud, where criminals obtain enough personal information to convincingly pose as pension savers. Methods identified include compromising email accounts, accessing correspondence between members and pension schemes, changing beneficiary bank details and creating fraudulent pension accounts using stolen identities.

In many instances, fraudsters are not exploiting weaknesses in the transfer process itself. Instead, they are targeting trust.

If a criminal can successfully convince a scheme that they are the legitimate account holder, they may be able to update personal details, alter banking information or create conditions that make future transactions appear legitimate.

This shift highlights an important reality: protecting retirement savings increasingly depends on an organisation's ability to establish trust in the identity behind any interaction.

Account Takeover: A Critical Risk for Pension Schemes

One of the most concerning forms of third-party fraud is account takeover (ATO).

Account takeover occurs when a fraudster gains access to a legitimate member's online account, often through stolen credentials, compromised devices, phishing attacks or social engineering.

For pension schemes, the consequences can be severe. Once inside an account, a fraudster may gain visibility of personal information, alter contact details, change bank accounts, gather intelligence for future attacks or initiate unauthorised transactions.

Our research highlights why this issue is becoming increasingly important. Login attacks have increased by 89%, while password reset journeys continue to be heavily targeted by fraudsters. These attack patterns suggest that criminals are focusing less on breaking security controls and more on abusing legitimate authentication processes.

The PASA Identity Management and Assurance guidance also warns that many pension providers still rely heavily on basic authentication methods and may not apply robust fraud checks until much later in the customer journey. By that point, an attacker may already have gained a foothold within an account.

Synthetic Identity Fraud and AI-Powered Impersonation

Another emerging concern is the rise of synthetic identities.

Synthetic identity fraud involves combining genuine and fabricated information to create identities that appear legitimate. These identities can be used to establish accounts, bypass controls or facilitate wider fraud activity.

At the same time, advances in AI are making impersonation attacks increasingly sophisticated. As highlighted in the Professional Pensions webinar, modern fraud threats now include deepfakes and AI-powered impersonation techniques capable of making detection significantly harder than traditional methods. These developments mean that relying solely on static personal information, such as names, dates of birth or addresses is becoming increasingly risky. Much of this information is already available through data breaches, social media activity or criminal marketplaces.

Trust can no longer be established through knowledge alone. Increasingly, organisations need confidence that the individual is both real and genuinely present during the interaction.

Trust and risk assessment across the member lifecycle in Pensions

Perhaps the most important lesson for pension providers is that fraud should no longer be viewed as a transfer-stage problem. LexisNexis® Risk Solutions has over 20 year’s expertise working with the UK’s leading Pension providers delivering innovative solutions that meet today’s challenges.

We consistently provide the pension markets deeper insights when verifying identities and risk assessing behaviours and transactions, to enable a seamless member journey in line with the providers risk-based approach, throughout the member lifecycle.

Our unique capabilities provide critical insights to help ensure that members are protected from high-risk events, like familial fraud or account takeover, by providing a more rounded picture of risk, made possible as a result of our collaborative market intelligence, and advanced data science capabilities.

View our latest infographic that highlights the trust and risk assessments needed at every step of the member journey to better combat fraud.

Government aims to better protect life savings

Recognising the growing threat posed by increasingly sophisticated fraudsters, the UK government announced new measures in June 2026 designed to strengthen protections for pension savers.

The proposals include a new safeguard that would allow transfers to certain Small Self-Administered Schemes (SSASs) to be paused where there is no clear link between the member and the receiving scheme, helping to prevent potentially fraudulent transfers before funds leave a pension. Importantly, the reforms also seek to reduce unnecessary delays for legitimate transfers, creating a more targeted and proportionate approach to fraud prevention.

As part of a wider programme of work involving government, regulators, law enforcement and the industry, the measures reflect a growing recognition that pension fraud can have life-changing consequences.

Looking Ahead: Building confidence in every interaction across the member journey

Digital transformation is creating enormous opportunities for improved member experiences, greater accessibility and operational efficiency. However, it is also expanding the attack surface available to increasingly sophisticated criminal networks.

The challenge facing schemes is no longer simply preventing fraudulent transfers. It is building confidence in every interaction across the member journey.

As fraud continues to evolve through account takeover, synthetic identities, first-party fraud and AI-enabled impersonation, identity is becoming the new frontline of defence. Organisations that can establish trust earlier, monitor risk continuously and strengthen identity assurance throughout the customer journey will be far better positioned to protect both members and their retirement savings in the years ahead.