DR ROS ALTMANN
DIRECTOR-GENERAL, SAGA
PRESS RELEASE
May 12, 2011.
SAGA: PHASE OUT “PENSION” AND ENCOURAGE SAVERS TO SAVE LIKE NEVER BEFORE.
The introduction of a “savers National Lottery” and phasing out the word “pension” from commercial products could re-invigorate long-term savings trends and help head off what seems otherwise to be an almost-certain pensions and care crisis.
Economist Dr Ros Altmann, Director-General of over-50s lifestyle organisation Saga, who is also a former government pensions adviser, says the financial services sector should phase the word “pension” out of all current and future commercial later-life savings products, and start to seriously address decades of mistrust in the whole pensions concept.
“People are wary of saving just at the time when we need savers to save like never before. Long-term saving must be made attractive, possibly even exciting, and certainly be given greater clarity and simplicity. It’s time for savers to have their cake - and eat it,” said Dr Altmann.
“It’s simple. There is not enough money to cover the basic lifestyle aspirations of a population with ever-increasing life expectancy. There is nothing like enough money to cover the cost of care that one-in-three women and one-in-five men will need, and the word ‘pension’ has become so negative that people simply don’t believe there’s any great benefit to be had by paying into one.
“The National Lottery – which probably has more perceived integrity than the personal pension system - yields occasional prize benefits to the lucky few, but with no savings element. Premium Bonds have a savings element but do not accrue interest, so actually lose value.
“But combining the two ideas – winning prizes and accruing interest, having your cake and eating it – is not inconceivable. The more somebody saves, the more likely they are to win, say, a monthly £1 million prize – an evolution of Premium Bonds. The key is legislating such that the investment is ring-fenced and secured in the same way as payments into current personal pension funds, with similarly defined periods before funds could be accessed.”
Ends
Further information:
Iain Macauley
07788 978800
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