Pensions? They're the last place people want to invest a windfall

Putting spare money into a pension ranks among the lowest priorities for most people, according to the latest Alliance & Leicester Cash Usage Survey.

This month's Green Paper on the future of pensions has done nothing to dispel the public's antipathy to pensions in the wake of the wave of bonus cuts and mis-selling scandals.

The survey shows that only 3 per cent of the population would consider putting a £1,000 windfall into a pension. Top choice was putting it into a savings account, favoured by more than a quarter of those asked.

Close behind that were the short-term considerations of paying for a holiday or home improvements, or simply "sharing it with family and friends".

Even if the windfall was boosted to as much as £10,000, still only 7 per cent would add it to their pension pot. This time more than a third would put it in a savings account, followed by sharing with family and friends, or buying a car or a holiday. Suggestion of a £100,000 windfall produced similar results. The only haven less popular than a pension was direct investment in the stock market – the choice of 4 per cent of those with £10,000 or £100,000 to deploy.

Karen Woods, sales director of A&L's Girobank offshoot, said: "It is evident from our survey that pensions do not have the priority in our minds that the Government thinks they should have. Whether it's big lump sums or regular monthly payments, it seems a lot more of us should be resolving in the New Year to put spare cash into funding a comfortable retirement."