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&#39£1m stakeholder lottery could boost pension savings&#39

The Government should introduce a stakeholder lottery paying out £1m a month to encourage low and middle-earners to save through a pension, according to a senior economic adviser to the Government.

Dr Ros Altmann says stakeholder has failed to penetrate its target market and the Government needs to take drastic action to increase its take-up.

But she says compulsion is a last measure, saying further incentives must be tried first.

She believes that Alan Pickering has failed in his task to simplify pensions and says the Inland Revenue&#39s report to be published in the autumn will be far more radical.

Altmann points to a lack of detail throughout the Pickering report, Government antipathy to dropping indexation protection and spouse benefits and a fixation on defined-benefit schemes as its greatest failings.

She says: “I think a great idea to increase take-up would be for there to be a lottery paying out money every month to those who save through stakeholder.”

Wentworth Rose managing director Philip Rose says: “I do not think it would work because the amount of money that you would have to commit to stakeholder is out of line with what you spend on lottery tickets.”

A Treasury spokesman says: “A lottery for stakeholder is not something that is currently being considered.”

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