There's much more to look forward to than a carriage clock when you finally hit retirement age. The whole structure of pension drawdown has changed in recent years and options for the individual have increased. First you should consider what extra contributions you can afford to make in the final years before retirement. Holders of personal pensions older than 50 can contribute up to 30 per cent of their net relevant earnings per year into the pension fund and claim tax relief.

The maximum contribution rate for members of company schemes is 15 per cent regardless of age but there is the option of rolling up the unused contribution allowance from the past ten years of employment before retirement.

Most insurance companies have structured mechanisms for moving to a cautious investment strategy in the closing years of the pension fund. With company schemes, members have to purchase an annuity (guaranteed future income stream) and the timing of that is important. The higher the interest rate at the time of purchase the better.

Then there is the tax-free lump sum. At retirement those with personal pensions are entitled to draw down up to 25 per cent of the value of their fund tax free. Members of company schemes can access one-and-a-half times their salary, subject to the completion of 20 years of service.

It will be the first time for most people to get their hands on that kind of cash. What each person does with their lump sum depends on the kind of person they are.

Some people will stick it into a deposit account. Others may go on a spending spree. If it's invested, the same issues arise as with any lump sum investment. After the personal pension holder has taken out the 25 per cent tax-free lump sum, he or she has to use the next £50,000 (€63,500) either to buy an annuity or to invest in an Approved Minimum Retirement Fund (AMRF).

The balance of the fund can be taken as a taxable lump sum or invested in an Approved Retirement Fund (ARF). The Irish Insurance Federation defines an ARF as a type of investment plan available at retirement to the self-employed, directors of family firms and certain other individuals, as an alternative to (or in addition to) an annuity.

"An ARF is bought with the proceeds of the individual's pension plan and can be invested in a range of assets from a variety of financial services providers. The ARF can be left to grow or part of it can be cashed in from time to time to provide an income," it says.

The rules governing ARFs, particularly the minimum annuity investment, have been criticised for being too lax. Some industry commentators have said that they raise the danger that retirees will draw down the pension asset too quickly and leave themselves open to real hardship later.

If you have paid AVCs into a company pension, you also have the option of putting these into an Approved Retirement Fund. With some restrictions, you can draw down a taxable income from your ARF as it suits you or leave it to accumulate tax free until a later date.

The decisions to be taken at retirement have become more complex and there is the possibility of further generation of wealth. For this reason, anyone approaching retirement should research their options thoroughly and take independent advice.