In the wake of the Budget, as the coalition government looks to address the huge debt of the nation, people are being advised to review their retirement planning.
While, Chancellor George Osborne avoided stating any explicit changes to pension provision, future plans are likely to include linking retirement age to life expectancy, and accelerating the rise in state retirement age over the next few years - up to 68 or 69 according to some commentators.
In addition, former Labour secretary for work and pensions, John Hutton, has been commissioned to hold a review of public sector pensions, with the view to narrow the gap between public and private pensions.
More than 40% of 45-54 year-olds don’t know the value of their pension, according to research from Standard Life, while 29% of 25-34 year olds and 22% of over-55s are in the dark about their fund’s value.
So here are five steps to help you get clued up:
Start your pension planning early
The earlier you start, the quicker you can build up a sizeable fund. The easiest and most common way to set up a pension is through your employer. The main benefit of this option is that your employer will usually match your contributions and sometimes even pay in more than you, so your fund is likely to grow quicker.
If your employer does not offer a pension scheme or you are self-employed the best alternative is a stakeholder pension. Find more information about stakeholder pensions on the directgov website.
Review your plan regularly
It is key to review your pension planning regularly. If you have a work pension, ensure you set up a meeting with the adviser at least once a year. It is likely when you joined your employer’s scheme you stuck with the default option. But different risk appetites will suit different fund choices so it’s best to discuss the options thoroughly.
Equally, if you have a private pension it pays to look over your investments on a yearly basis. While it would be nice to think you can choose investments that can be left alone for 10 years or more - and while pension investing especially should be considered a long-term game - it pays to keep an eye on the performance of your various funds and be prepared to make changes if necessary.
As we saw with the recent BP fiasco, situations can change very quickly and though it is wise not to act too rashly, it's a good idea to at least be aware of what you hold and how it might be affected.
Identify your risk appetite
Since pensions are probably the longest-term investment you are likely to have, there is room to experiment with them, particularly when you are in your late twenties through to your forties.
When it comes to other investment vehicles you might not be comfortable with putting money in riskier asset classes or geographical areas because you don't want to be faced with a 20-30% drop in your fund's value at any given moment.
On the other hand, your pension could be the ideal place for you to take on a little extra risk - no-one would suggest you put all your money into the BRIC nations (Brazil, Russia, India and China) but perhaps a little more than you would elsewhere.
As mentioned previously, it is important to review your positions regularly and gradually decrease your risk exposure as you get older.
Get a state pension forecast
Many people have no idea how much they are likely to receive from the government when they retire and it is easy enough to find out.
You can either fill in an online state pension forecast profiler, for a quick estimate, or you can apply for a full state pension forecast.
By equipping yourself with this knowledge, you can then think about how much you would need to maintain your current standard of living and work out the best way of addressing any shortfall.
This can be particularly useful for women who took time off from work to look after children or anyone who might have had a career break and therefore have not contributed enough national insurance.
It will also help you to decide whether it might be better to defer claiming your state pension in order to bump up how much you receive in the future. The bottom line is: knowledge is power.
To get your state pension forecast head to directgov.
Consider all the options
When it comes to deciding how and when you want to retire, it is vital you are aware of all the options available to you. The main thing to remember is your decision can be irreversible and since it relates to the funding of approximately a third of your life, should not be taken lightly.
Purchasing an annuity (a yearly income from your pension pot) can currently be put off until you are 75 (and if the new government gets its way, compulsory purchase of an annuity will soon be gone altogether) but once you make your choice, there is no going back.
Approximately 77% of people fail to exercise their open market option when buying an annuity - this is the right to look for the best deal they can find rather than buying the one offered from their pension provider - according to independent financial advisor AWD Chase de Vere.
Failure to shop around when buying an annuity can cost you up to 30% a year, and there are many types of annuity available, so if there's one time to pay for advice it's when making this decision. Alternatively, like most financial products, there are comparison sites available. Check out moneymadeclear.org and moneyfacts.co.uk.
For more advice on purchasing an annuity, watch Moneywise TV's How to boost your retirement income.