Having a prosperous and comfortable retirement is a common goal.

And making the most of your pension/s is all-important.

The two biggest factors in having a decent pension are the charges your plan levies and where the money is invested.

The lower the charges and the better the performance of your pension fund, the better the income you will have when you retire.

However, the more important of the two is the investment performance.

For example, the difference in growth between the best and the worst balanced managed pension fund in 2006 was 18.9% (source: Money Management, May 2007). Great if you are invested with the best, not so great if you are with the worst.

The problem with most pension plans is that the range of investment choices is limited so you might not be able to invest in the best funds.

Pension plans have evolved rapidly over the last 10 years.

Generally charges have reduced and the number of investment choices has gone up. Overall they have become far more attractive.

The new kid on the block is the Self Invested Personal Pension or SIPP.

A SIPP allows you to invest in a huge range of funds and shares, meaning that your investment choices are not limited like most pension plans.

Actually SIPPs have been around since the early '90s, but their popularity has increased significantly since the launch of the low cost SIPP.

Investing in a SIPP means that you can choose funds that have the potential to perform better than other pension plans and you have the ultimate flexibility to change funds if you want to. As we all know the value of investments can fall as well as rise and the risk profiles of funds vary, covering the full spectrum.

This is why so many people are consolidating their pensions and transferring them to SIPPs.

Apart from anything, it means that their pensions are in one place so they are easier to keep an eye on and manage. In some cases the more money you invest, the lower the charges.

Care is needed, however, when a pension is transferred to a SIPP.

You should ensure that you don't lose valuable benefits like guaranteed annuity rates.

You may also suffer charges for transferring, or if you are invested in with-profits a Market Value Adjuster reduces the value of your pension.

New pension rules make investing into a pension even more attractive.

Pensions Simplification was introduced in April 2006 to rewrite some 30 years of previous legislation. It demonstrates that the Government can, and indeed does, change the rules over time.

Perhaps the biggest win from these changes is the amounts that can be paid into a pension.

You can now pay up to 100% of your earnings into a pension plan and enjoy tax relief. The tax relief is capped at contributions of £225,000 (2007/8).

Even non earners obtain tax relief on their contributions, so for every £100 paid into a pension it costs a non earner or basic rate taxpayer £78 and a higher rate taxpayer £60.

This means that there is considerably more scope to fund a pension plan to save for retirement.

Of course, most of us have other things that we can spend our money on, such as food, mortgages, clothes and shoes for our children and so on, so investing even half of what we earn is unrealistic.

But what the limits do allow us to do is to 'turbo boost' with larger contributions in the event of a windfall.

What I particularly like is the way that non-earners can invest into a pension, receive tax relief and then in many cases not pay tax on the income when they take benefits. It's not often you get a tax benefit without it being clawed back.

Your pension funds also grow almost free of tax, meaning that the investment funds will grow quicker than an equivalent taxable fund.

When you retire you can take 25% of your pension fund as tax-free cash. Most people do this.

The remaining 75% of the pension fund has to provide you with an income. This can be by way of an annuity or through an Unsecured Pension (USP), normally referred to as income drawdown.

An annuity is a much safer option and USP is normally only for those with larger pension pots (£100,000-plus) or for those who do not rely upon their pension for income.

Combine the new pension rules for a flexible and low cost SIPP and you have potentially the ultimate retirement plan.

Nigel Lennox is a financial practitioner with Hargreaves Lansdown (Belfast).