The Royal Canadian Mounted Police is charging a 60-year-old London, Ont., woman after an investigation revealed she benefited from her parents’ pension payments long after they passed away.
Gladys O’Brien is facing three counts of fraud over $5,000, two counts of theft over $5,000 and possession of proceeds of crime.
The RCMP began investigating O’Brien in October 2017 when it received a fraud alert from Employment and Social Development Canada. Its probe found the woman continued to receive her parents’ retirement benefits through a joint bank account even though her mother passed away in 1993 and her father in 2006.
According to the RCMP, O’Brien received more than $179,000 in old-age security and Canada Pension Plan benefits over an eight-year period, and more than $135,000 from the Ontario Teachers’ Pension Plan over a 12-year period.
While pension fraud isn’t as common as benefits fraud, it does occur when a child or dependant intentionally or inadvertently benefits from a plan member’s pension, says Andrea Boctor, a partner and head of the pensions and benefits group at Stikeman Elliott LLP.
For the most part, pension payments end upon a plan member’s death, but some defined benefit plans have certain provisions, she explains. These include a spousal entitlement, which allows the living partner to continue benefiting after a death, and a guarantee period, which allows the estate to benefit from the pension for five to 10 years if the plan member dies soon after they started receiving payments.
Plan administrators trying to prevent fraud inform retirees their estate trustee is responsible for reporting their death when it occurs and through regular audits, says Boctor. “They’re getting a bit creative to try and ensure they’re getting a confirmation that the person entitled to the money is actually receiving it.”
Still, plan administrators can take extra steps to prevent fraud from occurring, such as doing more frequent audits for older retirees, sending a cheque via registered mail that has to be cashed personally at the bank and holding payment if they don’t receive confirmation from a retiree, she says.
Taking these extra measures will benefit pension plans in the long run, adds Boctor. “If they have a large group of pensioners, you hate to see losses occur to the pension fund as a result of fraudulent behaviour. Ultimately, if the estate is overpaid, the pension plan would have a claim against the estate to recoup that amount, but sometimes these amounts are actually not big enough to pursue.”