Putting money into a pension is one thing but what happens when it comes to drawing down an income in retirement. For those who are members of a defined benefit scheme, the answer seems fairly predictable. The scheme will lay down your entitlements.

For instance, it may state that you can build up benefits at the rate of 1/60th of final relevant salary per year up to a maximum of 40 years.

So you can earn a pension of up to two-thirds of salary if you stay with the employer your whole working life - assuming that in itself comes to 40 years. Your benefits are scaled back for every year short of 40 that you are a member of the scheme.

Clear enough then? Well maybe. What about the State contributory old age pension to which you should be entitled if you have made standard PRSI payments through your working life.

This pension is payable on top of the two-thirds maximum laid down by law but many defined benefit schemes pay their 1/60th per serving year, less any amount of the State pension.

Defined contribution schemes carry their own worries. At least, a defined benefit scheme member knows there is a guaranteed income there.

A scheme member is at the mercy of fund performance - something that will provide cold comfort with pension performance tables showing that fund managers have failed even to match inflation on average over the past five years. On top of all that, occupational pensions are rigidly controlled in how they can pay out the money you have saved when you do retire.

Effectively, they are constrained into buying an annuity - an insurance contract that pays a set amount each month by way of income.

Annuities have their benefits - most particularly in ensuring that people have a guaranteed income in retirement but they also have their drawbacks.

Most significantly, the retiree can find themselves at the whim of the market.

Annuity rates - the income payable per thousand euro of pension fund assets - decline with interest rates. Thus, in an era of low rates, someone retiring now would receive less of an annuity than a colleague retiring when the rates had moved to a higher point in the cycle.

For instance, last week the Central Bank noted that European rates may double in the coming years. Timing then, would make a fundamental difference to retirement income available.

The impact can be reduced somewhat by availing of your entitlement to take up to a quarter of your pension fund as a tax free lump sum payment on retirement and invest it as you see fit with greater flexibility.

A second drawback is, like any insurance policy, an annuity is rigid and any added benefit has a considerable cost.

Ironically, while being healthy benefits you in insurance terms all your life, it counts against you in annuity terms. Smokers and others in poor health get higher annuities as the likelihood is that the insurance company will have to pay the income over a shorter timeframe.

For the same reason, women get lower annuity payments because, on average, they live longer. Most critically, in general annuities die with the retiree. It is possible to provide a spousal pension in an annuity or to set a guaranteed minimum period for which the annuity will be pay or inflation proof the payments, but all carry significant costs reducing your monthly income.

For self-employed people paying into a personal pension and for people who have paid AVCs or who have a Personal Retirement Savings Account, there is a way to preserve greater control of your savings - the Approved Retirement Fund (ARF).

ARFs remain invested during a person's retirement. They can be put into equities, bonds, property or cash or a fund blending any mix of these. The pensioner draws down money as they require - paying income tax on it in the same way they would on an annuity.

A further advantage is that, when the pensioner dies, any money remaining in the ARF is transferred to the person's estate and can be passed on in accordance with their wishes.

On the downside, of course, there are fewer safety nets and in these days with people living longer - and possibly not taking a realistic view of how much they need to invest in a pension in the first place - you can effectively come close to running out of money.

However, there are some restrictions in place - if only to save people from themselves and from becoming an unnecessary burden on the State. People holding ARFs have to show a minimum annual income of €12,700, including the State pension.

If their annual income is below this, they must put €63,500 of the pension fund into an Approved Minimum Retirement Fund (AMRF) until they reach the age of 75.

This money is effectively ring-fenced until then so that an annuity can be purchased if required. The pensioner can still access the investment gains on the AMRF but not the capital.

ARFs may not provide the guaranteed income available under an annuity but it gives the individual greater control of the money they have assiduously banked for their retirement over the years. At the end, it is a matter of choice.