Over half (51 per cent) of pension transfers covered by the XPS scam protection service since lockdown, representing £25m in savings, have been flagged as at risk of a scam, according to XPS Pensions Group.

The analysis, which was prepared in response to the Work and Pensions Select Committee's call for evidence, stated that there had been a “steep rise” in red flag cases in July and August 2020, with just one in eight between 2015 and 2018 triggering scam warnings.

However, the analysis also revealed that factors triggering a red flag have changed over the past four years, with the proportion from cold calls falling from 22 per cent in 2016 to 2 per cent in 2020.

In contrast, the cases of high and misunderstood fee arrangements have seen the largest increase over the period, rising to 45 per cent, despite only becoming a recorded factor in 2019 (26 per cent).

XPS emphasised that unnecessary fees can have a “substantial impact” on pension income and can lead to a member running out of their pension savings eight years earlier than they would have under a low-cost option.

Advice-related red flags, including unauthorised advice, have also increased over the period, rising from 11 per cent in 2016 to 40 per cent in July and August 2020, although this is lower than the 54 per cent peak recorded in 2018.

Commenting on the findings, XPS member engagement hub spokesperson, Nicola Young, stated: “The worrying spike in recent months is driven by a significant increase in members that have little to no understanding of fees in the arrangement they want to use to access their pension savings.

“This may be a result of people urgently wanting to get at their savings due to current economic conditions.

“Over the last year we have seen more schemes provide access to independent and robust financial advice covering an additional 18,000 members.

“We welcome this, but more could be done if there were clear guidelines and regulatory protections for employers and trustees who seek to put in place education and access to such advice."

She added: “We are, however, starting to see concerned trustees and employers explore and implement a signposted, safe, low cost receiving vehicle for members that do want to transfer their pension savings.

“This can provide comfort to schemes and members that they are not moving to a scam or overly costly arrangement.”

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