IT is a startling figure: only eight per cent of the Scottish population is on track to save enough money for their retirement, according to the latest research by the insurers Aegon. But, rather than improving the situation and helping more people to save for their retirement, there is a very real risk that in the long term, the UK Government’s reforms will make the situation considerably worse.

The problem seems clear: the Chancellor George Osborne simply cannot stop himself from tinkering with the current system. In 2014, he swept away the old pension regime which required people to buy an annuity and replaced it with a new system that gives savers greater choice, including the right to take their pension as cash. He has also introduced a new flat-rate state pension from this year and in the last Budget unveiled a new Lifetime Isa which has been touted as an alternative to pensions for some young people.

The driving force behind all of these reforms would appear to be the Chancellor’s belief that savers should be given as much personal freedom as possible, which may be fine in principle but in reality carries considerable risks, including a repeat of something similar to the PPI scandal. There is also the danger that pensioners will simply be more likely to make decisions that are bad for them financially.

At this stage, it is still too early to judge how realistic those concerns are or whether the reforms are working, although it would appear consumers have largely taken sensible decisions. As yet, there is also no evidence of a spike in fraud and fears of a so-called Lamborghini Effect – in other words, pensioners blowing their cash all at once and leaving themselves with nothing to live on – would appear, so far, to be wide of the mark.

However, the lack of evidence of widespread problems does not necessarily mean the new system is working well, as it may take many years for pensioners to work out that they have made the wrong decision or been defrauded. One good sign from the Aegon research is that since last year, more than 150,000 people in Scotland have started saving more towards their retirement, but Aegon has also warned that the Government must avoid over-complicating the pensions market to encourage people to save more and potentially improve that shocking figure of eight per cent.

The warning is well placed. The majority of the public still appear to be very much in the dark about how the changes to the state pension will affect them and the new Lifetime Isa risks causing confusion and leaving savers paying penalties they did not expect. There is also a danger of pensioners using their new freedoms to make decisions that leave them worse off – they may cash in their pots, for example, without realising the full tax implications.

There is some guidance out there for savers – and there has to be an element of personal responsibility in pension provision – but the Government must keep a close watch on how the reforms are unfolding to ensure that a more complicated, diverse system is not harming consumers. It is a shocking fact that only eight per cent of the Scottish population is financially on track for their retirement, but it would be even more shocking if the Government’s obsession with reform made that figure even worse.