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The rules governing pensions and annuities are continually changing. However, there are certain things that are inevitable whatever new rules or schemes come into force.

Firstly, no one can rely on the state to provide a comfortable retirement.In November 1999, Pensions Minister, Jeff Rooker MP said, "Anyone relying on the Basic State Pension in Retirement will live in abject poverty." In other words it is up to you to make provision for your old age. Saving for a proper pension has never been more important.

Consider these figures

Average gross earnings are around £27,000 and the average life expectancy is around 83.Taking an average of 18 years and assume you want a gross pension income that is equivalent to 60% of average earnings (£16,000year). That's a total income needed of £288,000! Unless you are in a pension scheme that guarantees a pay-out linked to your salary (either based on your final salary or your average salary over the term of your employement), with an annuity rate of 7% you would need to build up pension savings totalling£220,000!

Compare that figure with the size of the average annuity purchased in 2004 - just £24,000 ( Association of British Insurers). At 7%, that would give you an annual income of just £1,680 or just over £140 a month, less than £32 a week! This of course takes no account of inflation.

How much should I set aside or pay into a pesion fund?
The answer is as much as you can! It depends on your age, but think of £100 per month as an absolute minimum.

Whether or not the Government makes Private Pension contributuions compulsory, everyone in work should be putting some money toward their pension plan.