FOUR out of 10 Scots face spending retirement in poverty as they are not saving enough into their workplace pension, but taking some simple steps could transform their prospects.

According to investment provider Scottish Widows, people across the UK underestimate how much they need to put away.

Robert Cochran, the firm’s retirement expert, said: “Our Retirement Report shows almost 23 million are failing to save adequately.”

To enjoy a comfortable old age, experts recommend investing at least 12 per cent of income.

Only 59 per cent of Scots meet this threshold, but many more could by making minor changes to their financial habits.

A third of people say they cannot afford to save more, yet when asked how much they spend each month on treats, they typically admit to around £50.

In fact, Scottish Widows’ research revealed that the average person spends £124 on every-day luxuries such as takeaway meals, taking taxis rather than public transport and buying clothes they hardly wear.

Cutting back on these non-essentials and putting the cash away could produce thousands of pounds of additional pension.

A 42-year-old saving the full £124 a month with a matching contribution from their employer could enjoy an extra £4,300 a year if they retired at 66, while a 22-year-old retiring at 68 could increase their annual income by £9,800.

“January is traditionally a time when we set out to improve our financial habits for the year ahead," said Mr Cochrane.

"While it would be unrealistic to suggest we live entirely without little luxuries, there is an important message about the need to ensure untracked spending today doesn’t harm our financial security tomorrow.”

Millions of people could already have more pension savings than they realise.

According to financial services company One Family, changing jobs means the average worker now has multiple pots, making it hard to keep track of them.

The member-owned investment firm said that a third do not know what they have saved and a further third have only a vague idea.

Just 47 per cent know which providers their pensions are with, leaving many unaware who is looking after their money.

One Family chief executive Simon Markey said: “The start of the new year is a great opportunity for savers to get their investments in order, plus think about the future and what they might need.

"Tracking down and keeping on top of existing savings is the first step.”

If you think you may have pension entitlement through an old job, contact your old employer’s human resources department or use the Government’s pension tracing service.

It is also worth checking your state entitlement as, despite what many people think, this is not an automatic right.

The new state pension is £159.55 a week - £8,296 a year - rising to £164.33 a week - £8,545 a year - in April and, depending on your date of birth, you may be 68 or older before you can claim.

To get the full amount, you need 35 complete years of national insurance contributions, and 10 years are required to get anything at all.

For a personalised state forecast, go to If there are gaps in your national insurance record, contact the Future Pensions Centre on 0800 731 0175 to find out if it would be worth making extra payments.

If you are not already a member of your employer’s retirement scheme, joining is the easiest way to make a significant difference to your future, as you will benefit from its additional contributions.

Almost nine million people have joined company schemes since auto-enrolment was introduced in 2012.

The minimum employee contribution is currently one per cent of salary with an additional one per cent from the employer.

In April, this will rise to three per cent and two per cent respectively, and the following year it will go up to five per cent and three per cent, giving a total of eight per cent of income.

However, this falls short of the recommended 12 per cent, so it would be wise to try to make any further contributions you can.