Baroness Patricia Hollis of Heigham believes the Government is failing to make personal accounts attractive, particularly to women.
Speaking at the Pensions Policy Institute means-testing seminar last week, she said: “The elephant in the room is the fact that for an awful lot of people, rationally or otherwise, pensions are not an attractive product. Most people do not want to buy them and we are not designing a product that people do want to buy.
“We need a product people actually find attractive so we do not have to whip them into buying something they are reluctant to, rather like buying their coffin.”
Hollis said many women on low incomes feel guilty putting away money for retirement because they are struggling to pay day-to-day bills and young people are also reluctant to lock away their money.
She considers the current state of markets and compulsory annuitisation are making pensions even less appealing.
Hollis believes that a flex- ible long-term savings account, in which people could build up a pension pot and then access a slice of it in an emergency, would be a better option.
She said: “It can be a divorce, a new house, it can be disability or university fees, but you cannot take another slice until you have rebuilt it. It is almost a top-slice credit union revolving savings element.”