AJ Bell has urged savers to be "on their guard" to the threat of pension scams, as Action Fraud reports a 400 per cent increase in scams linked to the coronavirus in March.

Warning of a surge in scam activity stemming from the economic uncertainty caused by the COVID-19 outbreak, the firm emphasised that many fraudsters are taking advantage of the pandemic as an opportunity to prey on vulnerable people.

It highlighted that a number of coronavirus-based investment scams have already been reported to Action Fraud, adding that those facing employment uncertainty are particularly likely to be targeted with ‘early access’ pension offers.

AJ Bell senior analyst, Tom Selby, commented: “While the country hunkers down in the hope of slowing the spread of coronavirus, the economic fallout will inevitably lead to an increase in the number of vulnerable or potentially vulnerable people in the UK.

“In such an environment unscrupulous scammers will already be plotting ways to take advantage during what for many will be a time of serious financial strain.

“Scams claiming to allow people early access to their retirement pots could come back to the fore if we see a surge in unemployment placing immediate pressure on household incomes."

Selby continued: “While getting access to your pension before age 55 may be tempting during this period of uncertainty, doing so will as a minimum see you hit with a 55 per cent unauthorised payment charge from HMRC in the first instance.

“At best you’ll then be subject to sky high fees by the fraudster as well, meaning you only get a fraction of your pension back and your retirement prospects are left in tatters. Many people lose everything as a result of these types of scams.”

This follows warnings from Aegon that the pandemic has created the “perfect conditions” for pension scammers to operate.

The warnings also follow the creation of an All-Party Parliamentary Group (APPG), established to boost public awareness of the risk of pension scams.

Selby concluded: "Everyone from the police and regulators to providers and charities has a role to play in tackling pension scams. However, the best way to protect your pension is to arm yourself with the tools and knowledge to spot the tell-tale signs of a scam.”

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