The Pension Review Service's Mark Abley says time has come to think a bit more about our pensions

Once upon a time, a pension was considered a rock-solid investment.

It still is – but like any other investment for the future, it must be managed correctly.

And, as too many workers in the region are now finding out to their potential cost, there is a depressing litany of corporate incompetence when it comes to the running of their pension funds.

The saga of Carillion’s staggering fall from grace follows hard on the heels of other bungled cases, such as the collapse of British Home Stores and the realisation by thousands of workers that their hard-earned pensions were not as safe as they were led to believe.

It is not the responsibility of the Government to bail out companies or the pensions of companies in the private sector.

In fact, even the Government does not have a big enough cheque book to do that.

Board members may have been negligent in their duties to the shareholders, however, it is for the shareholders collectively to hold the directors to account.

If they do not, they end up losing all their money – and the Carillion fiasco is a case in point.

The responsibility for regulating so-called defined benefit pensions, which are designed to give a steady income for life, rests with the pensions regulator.

Another major watchdog, the Financial Conduct Authority, has responsibility for regulating financial advice firms that offer guidance in this area.

Both these organisations carry the weight of serious responsibility to workers and ultimately represent the retirement interests of a substantial section of the UK workforce.

There is much talk about companies not meeting their pension liabilities while continuing to pay dividends and bonuses to board members.

However, I think it is easy to forget that many of the shareholders are relying on the dividends and share price growth to meet their retirement goals.

In such situations, current employees barely get a mention - how much higher could their pay packets be if the company did not have to pay additional contributions to the pension scheme? So, to the topic of transferring a final salary pension.

Why would you?

It is, after all, a major step coming out of the supposed security of a company scheme and into the potentially choppier waters of a personal arrangement where the worker ‘draws down’ for his or her pension fund and gets a handy taxfree lump sum along the way.

The advent of the final salary pension transfer only became a reality after April 2015, which saw the introduction of the socalled pension freedoms, allowing individuals to access their pension benefits in a manner of their choosing.

The new freedoms also allowed funds to be passed to the next generation free of inheritance tax.

This all sounds like very good news. Bear in mind that right now we have potentially a perfect storm, whereby interest rates are low so transfer values from a final salary pension schemes are high.

Sometimes, it could be argued, off the scale high.

There is also evidence to suggest that some employers are pushing transfer values even higher to encourage workers to leave.

Remember, it is very expensive for an employer to run a final salary pension scheme.

So, is it a good idea to transfer?

If you are going to look at the option, now is the time to do it.

However, it is a big financial decision and isn’t without risk.

Once a transfer is taken, the responsibility for the investment performance is with the individual member for life. Once you leave the scheme you cannot go back and there are no guarantees your pension fund will perform well in the open market.

And there will be costs involved.

Advice fees have risen recently, mainly because of the political and regulatory scrutiny many firms are being subjected to.

Ultimately, many firms are deciding not to give advice in this area because of the risks involved.

They do not wish to incur the wrath of the regulators and it is all too easy to be tripped up, given the enormous complexity of the advice protocols that must be carried out to the letter.

For many workers, it is unquestionably the right thing to do.

If you want to access your benefits flexibly, perhaps retire early and take a higher income until your state pension kicks in, or you want to ensure your family benefits from your scheme when you die, then it clearly has significant advantages.

But make sure you get the right advice.

Once you make that decision, there is no going back.

• Mark Abley is managing director at The Pension Review Service, which is based in Spennymoor, County Durham