The government has raised £4.5 billion of new funding for pensions in 2012/13, but with this amounting to just £6 a week for most pensioners, the onus remains on anyone approaching retirement to make the most of their own finances.

Prime minister David Cameron announced the additional money, which is being used to raise the average state pension payment to £124 a week, up from £118 last year. The basic state pension will rise from £102.15 to £107.45 this week.

He said: "We owe older people in society our respect, our support and our care. That's why from the start I've made sure this government protects pensioners and gives them the help they need."

But critics have been quick to point out that this increase merely keeps the state pension in line with the current high inflation rate.

With this in mind, it is important to consider the options for maximising your finances in later life, even if you're not yet ready to retire.

Equity release is one option, allowing you to unlock cash from the value of your home. But depending on certain health and lifestyle factors – such as if you smoke, have high cholesterol, or suffer from more severe medical conditions - an enhanced annuity might make more sense.

This allows you to take advantage of a much higher pension income, typically 43 per cent higher than the lowest standard annuity.