Half of all pension transfers have triggered scam related red flags since the outbreak of COVID-19.
These are the findings of a report by XPS Pensions Group, in response to a call for evidence from the Work and Pension Select Committee on pension transfer scams.
The transfers represent around £25m ($32bn) in pension savings.
There has been a steep rise in red flag cases from just one in eight between 2015 and 2018 to 50% of all cases in July and August 2020.
Factors triggering a red flag have also changed according to XPS. Those targeted with cold calls fell from 22% to 2% between 2016 and 2020. But cases of high and misunderstood fee arrangements saw the largest increase, rising to 45% over the same period.
These unnecessary fees can lead to a pensioner running out of their pension eight years earlier than they would have done under a low-cost option.
Nicola Young, XPS member engagement hub spokesperson said: “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.”
Young said although more could be done to improve guidance and regulatory protection, progress was being made.
“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.”