Look at some of the ways in which you could secure a financially brighter retirement.

1. Start saving for your retirement early
It may seem really obvious but the younger you are when you start a pension, the better, because it means you’ve got more time to make contributions and there is more time for those invested contributions to grow. According to a study published in September by Aviva, in conjunction with accountants Deloitte, the UK has the largest pensions gap per person in the whole of Europe, and UK adults now need to save an average of £10,300 every year to catch up.

2. Join your employer’s occupational pension scheme
If your employer offers membership of an occupational pension scheme, join it. These are employer-run schemes that have trustees who are responsible for the schemes being run properly, legally and fairly. If your employer has a scheme, it is almost always in your interests to join because of the employer contribution, which is in effect a tax-free benefit. More than one million people who could join company schemes don’t, according to the National Association of Pension Funds.

3. Take advantage of tax relief from HMRC 
Make the most of tax breaks. Tax relief reduces your tax bill or increases your pension fund. Anyone, including children and non-taxpayers, can receive tax-relief from HM Revenue & Customs (HMRC) to help increase their pension. The way you get tax relief on pension contributions depends on whether you pay into an occupational, public service or personal pension scheme. Contributions attract basic-rate tax relief. So £80 paid into a pension is automatically increased to £100 before costs. High earners can achieve the same effect by paying in £60, subject to complex and changing restrictions.

4. Increase the control over where you invest your money 
Unlike most traditional personal pensions, a Self-Invested Personal Pension (SIPP) offers you different investment options and gives you more choice and control over where you can invest your money. There are significant tax benefits. The government contributes 20 per cent of every gross contribution you pay. If you’re a higher or additional rate taxpayer, the tax benefits could be even greater.

When you wish to withdraw the funds from your SIPP, currently between the ages of 55 and 75, you can normally take up to 25 per cent of your fund as a tax-free lump sum. The remainder is then made available to provide you with a taxable income. As with all investments, the value of the fund you have invested can go down as well as up and you may not get back as much as you invest. The increased cost and control of a SIPP will generally come with higher charges, so for individuals not requiring the additional flexibility, a traditional personal pension may be more appropriate.

5. Pay extra National Insurance contributions 
Consider paying extra National Insurance contributions (NICs) to increase the state pension. This is most likely to benefit women who have taken time off work, perhaps to bring up children. However, you need to beware of means tests. There could be risks associated with buying back missing years of NICs and you should always obtain professional financial advice. Although buying back missing years can be a good deal, the government won’t go out of its way to tell people about this with its finances stretched.

6. Make additional contributions to increase your retirement fund 
Topping up an Occupational Pension Scheme pension is one of the simplest and most effective ways of cutting your tax bill and increasing your retirement fund. An Additional Voluntary Contribution (AVC) is an extra pension contribution you can make if you are a member of your employer’s Occupational Pension Scheme.  AVCs offered by an employer’s scheme are sometimes referred to as ‘In-House AVCs’. Some AVC plans attract ‘matched’ contributions from the employer and you should check if your employer offers this benefit.

7. Take advantage of the Open Market Option (OMO) 
When you are nearing retirement, your pension provider will usually send you a quotation regarding your pension scheme. It’s important you take advantage of the Open Market Option (OMO) to maximise your pension fund. The annuity offered by your pension company may not be the most competitive scheme and choosing the OMO could considerably increase the value of retirement income. The OMO is a legal right to buy a pension annuity from any provider on the market. This can apply to both a standard annuity and a with-profits annuity. Choosing the right pension annuity is extremely important, because once purchased, annuities cannot be switched to another annuity provider, changed to a different type of annuity or altered in any other way

8. Buy an annuity that pays out a higher income
If you enter retirement with a medical condition, or if you smoke, you could be eligible for an enhanced or impaired-life annuity. They work on the basis that you will have a shorter life-span than someone in a better state of health, essentially enabling you to use up your pension fund more quickly by giving you access to more money each year. It is always important to obtain professional financial advice, as the decisions you make determine the income you will receive for the rest of your life and you can’t correct bad decisions later on.

9. Different retirement income alternatives 
There are alternatives to purchasing annuities, including income drawdown, which enables older people to withdraw small amounts of their retirement money annually as income and then leave the rest invested in the stock market with the aim of achieving better returns, although this is not guaranteed. Another option is ‘phased retirement’, where, rather than converting your entire fund into an annuity at the same time, you take the benefits of your pension gradually over a period of time, either by setting up an annuity or moving more money into income drawdown. These alternatives are not suitable for everyone. Therefore it is important, if you would like to know more, to obtain professional advice.

10. Get advice about the annuity rule changes 
It has long been the case that anyone with a personal or company ‘money purchase’ pension had to purchase an annuity with their pension fund by the age of 75 (current temporary measures to age 77). But the Chancellor of the Exchequer, George Osborne, announced during the Coalition Budget 2010 the removal from April 2011 of the effective obligation to purchase an annuity by age 75. Consultations on these proposed changes are continuing and final rules are awaited.

This is a major change that will give many people more choice about how they make use of their money, but there will still be restrictions. You will almost certainly have to meet a minimum income requirement in order to benefit fully from the new flexibility. However, the changes will not mean the end of the annuity and, for most people, buying one could still remain the best way of securing a guaranteed income for life.