Pension liberation

3. If you've already done it, you have 30 days to change your mind

It's unlikely pension liberation firms will tell you this, but you have the right to change your
mind and ask your old pension company to reinstate your pension (it's at its discretion whether it will). Once the money has been released, which typically takes 30 days, you can't reverse it - and the taxman is due his 55% share

4.  Any cash you're left with will be invested at high risk

The remainder of your pension fund is likely to be invested in highly dubious and risky, unregulated investment structures, often based overseas. In this case you may end up losing the rest of your pension altogether if these investments go south.

5. Some terminally ill people can legally get their hands on their pension early

There are some circumstances where you might be able to legally take your pension before you're 55. Some schemes will allow people who are terminally ill to access their pension before they're 55. Even if your pension company allows it, take financial advice, you may be better leaving the pension where it is.

If you answer 'yes', it is pension liberation, and it is most definitely not legit. So JUST SAY NO!

What do pension liberation schemes actually do? Liberation schemes often work by transferring some of the pension fund into highly risky or opaque investment structures, frequently based overseas - with no guarantee that you'll get your money back if something goes wrong.

The Pensions Regulator says that it has been made aware of options to purchase property, property abroad, timeshares, oil, trees, crops and carbon credits and that countries have included Belize, Cambodia, Cyprus, the British Virgin Islands and Germany.

Investing money abroad can make your money harder to trace and retrieve if/when the scam is closed down and allows those running the scheme to spend your money in jurisdictions which normally have less strict regulation than the UK.

The Pensions Regulator is trying to crack down on these scams and the Government wants new laws to ban them, but until then, you'll need your wits about you.

How much could I lose?

Be warned, the answer to this is scary! Many people will lose 50% or more of their pension, and potentially the whole thing. For some, this could be £100,000s.

Let's suppose that you start out with a fund of £100,000. You're 51, you want to get your hands on £25,000 and you've gone with a pension liberation firm...

• You take £25,000, so you've £75,000 left.
  
  
• Your pension liberation firm has fees of 20%, so takes £20,000 from your pension fund - you've now got £55,000 left.
  
  
• The taxman pops up, and charges 55% of the whole pension pot - so you're left with... NOTHING in your pension.

You've got your £25,000, but you're left with absolutely nothing for retirement. If you'd waited four years, until you were 55, you could have legally got the £25,000 and not lost £10,000s in taxes and fees.

Quick question