Nearly 12 million people in the UK are still not saving enough money to fund their retirement, according to alarming new research from the Department for Work and Pensions (DWP).

The stark reality is that without making some significant changes to their saving habits, many people will be forced to work well into their old age, if indeed they are able to do so, to avoid significantly compromising their lifestyles – or worse living on the breadline – when they do eventually come to retire.

The DWP research highlights that just half of the 11.9m people in the UK included in these statistics are currently on the right track to reaching their retirement income objectives, with others less than half way there.  And yet these individuals could, the report finds, protect their future in retirement if they had a sound, financial strategy in place now.

So, with this in mind, what effects will be generated from the government’s recent pensions reforms and modifications?  Will they improve the somewhat bleak outlook?

One of the main changes set out in this year’s Budget is in regards to the provision of free impartial guidance to people who will soon be able to have unrestricted access to their pension savings.  This new legislation is, in my opinion, the exact opposite of what a pension is supposed to be, i.e. providing income to fund retirement.  And this ‘one-size-fits-all’ government guidance could lead to a whole host of potential problems in the future, as it will not be tailored towards people’s specific goals and financial requirements. It will be as deVere Group’s founder and CEO, Nigel Green, said “dangerously generic.”

Following the Chancellor’s announcement in this year’s Budget that life expectancy estimates are to be included within the at-retirement advice, deVere United Kingdom’s Head of Financial Planning, Kevin White, commented: “If someone has £100,000 and they buy an annuity and receive £500 per month, but these new guidelines suggest that they will live for another decade, then there could be the temptation to spend £10,000 a year and have nothing remaining should they be fortunate to live for another 10 years.”

The after-effects of this could be devastating during ‘the mature years’.

Another initiative that is having serious unintended consequences for people across the country is the Retail Distribution Review (RDR), which was rolled out last year.

Since the Financial Services Authority introduced RDR, the supply of independent financial advice has dwindled as a number of major banks and advisory firms are only offering ‘restricted’ advice to avoid the more stringent regulations associated with RDR.  Although the aim is to reduce mis-selling and drive industry standards higher overall, RDR has left many people, typically those less affluent, in an ‘advice black hole’, with many deciding to ‘go it alone’ – and again, this can have potentially disastrous long-term financial consequences.

At a time when we’re all living longer, when the cost of living is increasing, and when there are constant changes of the pensions and taxation systems, taking control of your pension and making retirement planning a personal responsibility has never been more important. Indeed, it is now vital.

Seeking professional, independent financial advice is almost universally regarded as the best option when it comes to saving for the future and securing financial freedom in later life, and to avoid dramatically ‘down-sizing’ retirement plans and side-stepping the threat of poverty in your golden years.

This research by the DWP drives home the significance of saving for retirement, and to start putting money aside in your pension pot as early as possible in your working life in order to have the ability to enjoy a comfortable, desired retirement.

As Mitch Hopkinson, Head of East Midlands at deVere United Kingdom summarises: “If you leave it too late you could find that you have to save a lot more, or worse still put your retirement date back in order to increase the length of time you have to save.”

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