With millions of people potentially facing poverty in old age Alok Dhanda explains why it is never too soon to start saving for your pension.

IN this tough economic climate, it can be easy to forget to put money away for your old age, but it is very dangerous to ignore the necessity of pension planning.

At a time when the UK is facing severe financial challenges, and many companies are cutting back final salary pensions, it is vital to make sure that you are financially prepared for the future.

Many people underestimate the importance of a pension, believing that their business will provide them with a sufficient income, or that they will simply sell their house instead. This is a very risky way of thinking, especially considering the instability of today’s economy, when so many businesses are struggling to survive.

Worryingly, a third of people in the UK in their 50s have no retirement savings. Additionally, a recent Daily Express article revealed that seven in 10 UK employees will have to work well into their 70s, and they will still face poverty in retirement through living on a state pension of just £102.50 a week.

The majority of people are not on target with their savings because they are simply unaware of how much they should regularly be putting aside.

It is important to find out what you are worth now, so that you can adequately prepare for the future. To take the first step, visit www.direct.gov.uk where you can download a BR19 form and apply for a state pension forecast.

This reveals your likely state pension according to the contributions you have made up to now. Once you know how much you are likely to receive, you can adjust your financial planning accordingly.

These days, thanks to a better standard of living and excellent levels of healthcare, men and women in the UK can expect to live until their late 80s and early 90s. By 2034, 23% of the population is projected to be aged 65 and over. It is evident that the state pension alone will not be sufficient to maintain a comfortable lifestyle in retirement, so you should still be proactive by regularly putting money away for your pension in your own personal funds. An independent financial adviser (IFA) will be able to help you to set up a private pension.

It is often assumed that pension schemes are too expensive, but the truth is that there are some low-charge schemes that are well worth looking into. There are a growing number of personal pension plans that don't carry high upfront charges, but it is important to carefully check the documentation you are sent for the figures that show what you might get back after various time periods.

A good pension will be one that is flexible and takes account of the fact that your life might change. It should allow you to retire at any time after 55 without penalty, stop paying contributions at any time without penalty and vary contributions at any time.