Saving for retirement through a pension remains by far the most popular way of making provision.

Although we had the recent pensions miss-selling scandal, coupled with falling annuity rates, the pension, be it personal or occupational, is still seen as the bedrock of financial planning for retirement.

Also, with the introduction of the Government's Stakeholder pension next year, which will have a greatly-reduced charging structure than many previous personal pensions that were sold, this should encourage even more people to save for retirement through pensions.

There is, however, a sting in the tail with pension planning for many with personal money purchase pension plans - how to take the pension once you reach retirement.

Although there are various options open to us, like drawdown, phased retirement or taking a with-profit annuity, by far the most popular way is through a conventional guaranteed compulsory purchase annuity and, surprisingly, the great majority of us just take the annuity on offer from the company to whom we have been paying our contributions without taking any advice!

One of the main reasons that I come across for just sticking with the company you've been paying into for your pension is because most people are not aware that you are able to shop around to get a better pension.

An example of this was highlighted by one of our clients recently, who has been saving for retirement through a pension with Eagle Star.

She has now reached state retirement age and wants to take her personal pension.

Eagle Star have offered a pension of £102.50 per month for the pension fund she has, which she thought she had to take, but by shopping around on the open market, we are able to get slightly more for her through Standard Life, £118.66 per month for the fund value of £26,382.

That's an increase of more than 15 per cent on what her existing pension provider is offering.

However, because I am aware of my client's past medical history, namely, having had breast cancer, being diabetic and a smoker, I was able to approach one of the companies that offer enhanced rates for those of us who have ill health, this time, the Pensions Annuity Friendly Society, which has increased the pension annuity payment to £148.91 per month, an increase in the region of 45 per cent, which is huge, and just goes to show that you must shop around because, if you don't take advantage of an extra 45 per cent pension, you are surely guilty of miss-buying!

Garry Spencer is a financial specialist with Worthing-based Wilbury Financial Management. Contact him on 01903 213222 or garry@wilbury.uk.com
Wilbury Financial Management is a member of IFA Network, which is regulated by the Personal Investment Authority.