A report from the work and pensions committee said new reforms, which came into force in April allowing savers aged 55 or over full access to their pension pot, “have increased the prospects of people being conned out of their life savings”.

It said the government and the Financial Conduct Authority (FCA) are “taking the right approach in promoting awareness” as the best weapon against scamming, but they “could do more”.

“We recommend the government urgently redouble its publicity efforts around pension scams. We further recommend the FCA tighten its scam awareness and reporting requirements for regulated firms,” the report said.

“Scams are a tragedy for individual households and undermine trust in the law-abiding and responsible majority in the retirement finance sector. Scammers must be stopped. We will monitor action on pension scamming closely over the course of the Parliament.”

The committee, chaired by MP Frank Field, also warned that pension freedoms could end up being the next financial services mis-selling scandal.

The report said: “The difficulties consumers have in understanding financial products can result in a mismatch between buyers and sellers. The financial services industry has a recent record of taking advantage of this asymmetry in a string of mis-selling scandals. In itself, greater flexibility and choice in deciding how to use pension pots creates more complexity for consumers and increases the potential for them making poor decisions or being scammed.”

The MPs said improvements “in guidance and advice are crucial to the success of the policy” and they will monitor progress closely.

“It is right that people should be able to choose what to do with their retirement savings. However, freedom to choose is not enough; people must have freedom to make informed choices,” the report concluded.

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