A leading pension expert has suggested introducing lottery prizes as a way of incentivising people to save for their retirement.
Writing in the CII Retirement Savings Report, Dr Ros Altmann said pensions need an image makeover if a culture of saving for the long term is to be reinvigorated.
The report highlights the inadequacy of the current retirement system and suggests millions of future pensioners will effectively end up living in poverty, and have no funds to pay for their own care.
It is estimated that at least a quarter of retirees currently aged 65 will require care costing over £50,000 each, yet no money has been set aside for such an eventuality.
The CII said the average pension fund amounts to just £30,000, and this has to cover the whole of someone's retirement, and does not include any provision for care costs at all.
Claiming people have lost faith in pensions, Dr Altmann said the notion of long-term savings must be revived.
Renaming private pensions to separate them from the negativity associated with the word 'pension' is one idea put forward by Dr Altmann – she believes 'pension' should only be used for the money paid by the State, and that an individual's own retirement savings should be called something else.
Even more radical, however, is the idea of having lottery prizes to help increase the attractiveness of retirement saving.
"Everyone contributing to a pension could be entered for a draw to win £1million each month," Dr Altmann suggests.
"The cost relative to current spending on pensions marketing would be small, but offering savers the potential of something in it for them today, not just in the future, could be more attractive.
"People are reluctant to save and we need to rediscover our once-strong retirement savings ethic."
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