SCOTLAND’S largest local authority has called in the police after around £300,000 was found to have been paid to a “deceased pensioner” in a “significant potential fraud” spanning decades.

Glasgow City Council flagged up the problem in its newly published annual accounts.

The council is responsible for administering the £20billion Strathclyde Pension Fund, which has 250,000 members who worked for Glasgow and 11 other councils.

After being alerted by returned mail, the Fund discovered in February that one pension had been paid out “over a lengthy timeframe” despite the intended recipient being long dead. 

It is understood another family member had been collecting the cash since the 1990s.

The council’s internal auditors were then alerted and the payments swiftly stopped.

Fraud involving dead pensioners is not uncommon, with relatives withdrawing money from bank accounts without informing the pension authorities of a death.

However the amount involved in the Strathclyde Fund case is almost ten times bigger than average because of the long timescale.

In its last National Fraud Initiative exercise in 2018/19, the spending watchdog Audit Scotland found around £3.2m that had been paid to dead pensioners by public bodies.

The average amount of money involved in each case was £32,600.

However recent efforts to tackle the problem have been proving successful, with a £2.2m drop in this type of fraud since 2016/17 in Scotland.

Across the UK, dead pensioner fraud fell 59 per cent from £143.7m in 2016/17 to £59.1m in 2018/19.

A key factor has been the “tell us once service” that lets people report a death to most arms of the state when they register a death, simplifying the process and reducing the risk that a grieving relative will forget to tell a pension fund and then become tempted by the continuing income. 

To help ensure public sector pensions are only paid to those still alive, the Scottish Public Pensions Agency also carries out twice-yearly “mortality screening”, cross-referencing payments against death records.

In the Strathclyde case, the person’s death was so long ago it pre-dated the current checking system. 

In its unaudited accounts for 2020/21, Glasgow City Council stated: “In February 2021, the Strathclyde Pension Fund Office became aware of a significant potential fraud that had occurred over a lengthy timeframe.  

“Internal Audit were promptly informed and the matter was investigated. It has been confirmed that a pension had continued to be paid to a deceased pensioner to the value of circa £300,000. 

“The Strathclyde Pension Fund Office was not notified of the pensioner’s death, which pre-dated current data matching controls.

“On uncovering the overpayment, immediate action was taken to stop all future pension payments.

“Internal Audit reported the potential fraud to Police Scotland who are reviewing the case.  

“In the meantime, work is ongoing between Internal Audit and officers within the Strathclyde Pension Fund to ensure there are no other similar cases and to determine what further controls, if any, can be put in place.” 

Although currently SNP-run, Glasgow City Council was under Labour control for most of the period concerned.

It is understood there is little likelihood of the money being recovered as it has been spent. 

The Strathclyde Pension Fund is one of the 20 largest UK funds and one of the top 50 European pension funds.

A spokesman for Strathclyde Pension Fund said: “Families not disclosing that a member has died, whether deliberately or not, has always been one of the classic risks for any pension fund. 

“Unlike paying a salary to an employee, you do not expect to regularly see or hear from those drawing their pension after retirement.

“Modern data-matching, through the National Fraud Initiative, has greatly reduced that risk – however, this case predates the introduction of those controls.”