In a YouGov survey for Baring Asset Management, a staggering nine million adults were shown to have failed to make any plans for retirement. Yet they may struggle to live on the state pension, which is currently £90.70 per week for a single person and £145.01 for a married couple.

This is the basic rate and the present pension credit (guaranteed element) weekly is £124.05 (single) and £189.35 (married couple).

Relying on your property as a pension is a risky strategy although the survey showed that 11 per cent of those planning to retire before their 50th birthday were going to fund their retirement that way.

Longevity is a key factor. Last year 16 per cent of the population was aged 65 or older (amounting to 9.8m) but this is expected to rise to 20 per cent by 2021 (12.7m) and 25 per cent by 2044 (17m).

It is therefore vital to build up a financial cushion for all those retirement years. Many actuaries recommend contributing to a pension fund from the first day of work.

It has actually possible for even a baby to start a pension. Almost all individuals under 75 years can contribute up to £3,600 (after basic rate tax relief) to a stakeholder or personal pension scheme without reference to their annual earnings. Children and spouses with no earnings can also contribute or have premiums paid for them.

To encourage pension contributions, tax relief is given. For a basic-rate taxpayer, only £80 needs to be invested to have £100 placed into their pension pot with the Treasury making up £20. Higher rate taxpayers can claim a further 20 per cent – making a 40 per cent discount overall – through the annual tax return.

Employers also enjoy an incentive to boost staff pensions as they are exempt from National Insurance, thereby making it more beneficial to pay towards a pension than a salary.

The annual contribution allowance is £235,000 (up from £225,000 last tax year). If individual and company contributions exceed this level, tax at 40 per cent is levied on the excess. The allowance will increase in steps at around five per cent annually until 2010 when it will be reviewed.

Before deciding on investment options, calculate the level of savings needed to achieve your retirement lifestyle and therefore the annual input required. Stockbrokers and good independent financial advisors can assist with such calculations.

One of the major drawbacks of pension savings is its inflexibility. With most funds and occupations, it is not possible to access any of the money until you are 50 (55 from April 2010) with a one-quarter limit generally with the balance being used to purchase an annuity.

For basic rate taxpayers – both now on savings and who expect to stay at that level for later income – tax-exempt alternatives like ISAs may be better.

Up to £7,200 can be sheltered in an ISA for each adult this year. Remember also the useful friendly society 10-year plans (maximum £270 annually) which include life cover.

Whilst pension income is subject to income tax, ISA money and mature friendly society plans are free but if unused are liable to inheritance tax.

Another potential solution is a capital investment bond. This can have benefits for current higher rate taxpayers who expect to become basic rate payers when retired.

Consider your attitude to risk. For those planning decades ahead, some exposure to emerging markets makes sense. The risk/profit factor with shares quoted on the Alternative Investment Market (AIM) should also be considered.

Then, as you grow closer to requiring the retirement money, move towards less volatile and safer investments. Throughout it is vital to ensure a balanced and diversified portfolio. Far too often there is over-exposure geographically (notably over-investing in the UK) and by sector (particularly property).

Some stockbrokers right from the beginning only aim for companies which have a good track record over the long term and have shown they can make profits through a full economic cycle.

Edward Jones take this view. They also avoid "any with-profit funds because of the opaque nature of the investment mix and charges," says Andy James, their Retirement Planning Manager.

Andrew Priestley, Head of Technical Services at Skipton Financial Services, says: "Place 100 per cent of retirement money in equities whilst under 40 years," but adds "unless you plan to retire at 55!"

Mr Priestley also stresses the importance of global diversification. The firm, a part of Skipton Building Society, makes no charge for advice and is paid instead from commission.

With equity turbulence in the last year, Nigel Peaple, Policy Director at the National Association of Pension Funds, says, "We have no reason to believe that the current market conditions will affect the ability of pension funds to pay out the expected amount to members."

A with-profits fund aims to smooth out the peaks and troughs. Traditionally providers declared fair annual bonuses which were locked into the value of each policy and a final top-up. Today many have stopped this and place far more weight on a terminal bonus which makes planning impossible.

A male now aged 65 who has contributed £1,000 annually into a with-profits plan for 15 years could expect to receive £29,813 (NFU Mutual), £28,107 (Prudential) or £28,001 (LV=, formerly Liverpool Victoria) but only £20,788 from Friends Provident), according to Moneyfacts.

On the same basis, a unit-linked pension plan would pay £27,311 (Zurich Assurance), £27,086 (Wesleyan Assurance) or £25,864 (NFU Mutual) but only £21,041 at Phoenix Life, former Britannic Assurance.

Those regularly under-performing include Clerical Medical, Norwich Union and Scottish Widows.

"Many customers are still to regain their trust in traditional pension products," reveals David Kerr, Pensions Strategy Manager at Yorkshire Bank, which offer advice on a multi-tied basis through 22 financial solutions centres.

If you like transparency, consider a pension through an investment trust. Currently there are eight such providers, six of whom accept monthly contributions from £50. Two – Alliance Trust and JP Morgan – have no initial or annual fees.

The minimum lump sum is £1,000 except Alliance Trust which accepts from as low as £50. For details of the range, contact the Association of Investment Companies (0800 707707).

In pension fund sectors, research by Lipper is wonderfully revealing.

Based on £1,000 investment over five years, the top performers are Global Emerging Markets (average £4,255), Asia Pacific excluding Japan (£2,837), UK smaller companies (£2,507) and Continental European equities (£2,475).

Showing the ultra cautious are penalised, the comparative returns are Global Fixed Interest (£1,154), UK Gilts (£1,164), Sterling Corporate Bond (£1,184) and Sterling Fixed Interest (£1,187).

If you feel confident enough to tackle the investment choices – perhaps guided by an advisor – opt for a self invested personal pension (SIPP).

Such a wrapper is widely available and the small cost is likely to be lower than the fees charged by many providers with all your money invested on a transparent basis.

Hargreaves Lansdown, a leading SIPP provider, has no set up charge, no annual fee on over 1,700 funds and no charge to switch between funds (0800 138 2121).

Finally, if you are already topping up a pension through an employer, with an AVC or a free-standing AVC, the pension pot can be taken at a different time to your main pension. Such flexibility could be useful to your retirement planning.

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