Call for a £1m pensions lottery to encourage saving for retirement

The prospect of a lottery bonanza may prove more of a motivation to build up a nest-egg than any advertising and marketing campaign, and could even save the state money, said pensions expert Ros Altmann, director-general of Saga.

She also proposed scrapping the term ‘pension’ for retirement savings, arguing it has become a negative term and should only be used for the money paid out to older people by the state.

Writing in the CII Retirement Savings Report, Dr Altmann said Britain was facing a pensions crisis as the baby boomer generation hits 65 without having made adequate provision for their old age.

The average pension fund is only £30,000 to cover the whole of retirement, but one in three women and one in five men will need to go into a care home for an average of two years, costing well over £50,000, she said.

The report called for people to be prepared to work longer and for measures to be introduced to encourage them to save more – including a pensions lottery.

“It is absolutely vital that we reinvigorate long-term savings,” said Dr Altmann. “People have lost faith in pensions and many have put no money aside for retirement, never mind for long-term care. We cannot go on like this.”

She added: “Pension has become a negative word and it should be used only for the money paid to you by the state. The rest is your own savings for your own future and should be called something else.

“I believe it could also help enormously to give better incentives – such as a lottery perhaps – to be offered with retirement savings. Everyone contributing to a pension could be entered for a draw to win £1m each month.”