Pension alert as you could turn £2 habit into extra £10,000 for retirement pot | Personal Finance | Finance

National Lottery players trying their luck to take home a big cash prize may be better off putting their funds in a pension.

Research from PensionBee has found that an 18-year-old who puts the cost of a £2 lottery ticket into their pension each week until they retire at 66, would get an extra £9,958 towards their retirement.

This compares well with the odds of the same person winning £10,000 on the lottery, at 0.05 percent.

Becky O’Connor, director of Public Affairs at PensionBee, said: “It’s hard to overcome the allure of receiving millions of pounds overnight, which is why so many of us play the lottery week in week out, even if we rarely win anything.

“But there’s more chance of ‘winning’ big with a pension than there is entering the lottery – the catch is that you have to wait until you reach retirement to reap the reward.”

The group encouraged Britons that just a one percent increase to your pension contributions can make a big difference with compounding interest over time.

Workers may also benefit from approaching their employer to ask if they will match their increase in contributions.

The PensionBee team also encourage people to check the investment plan for their pension.

They explained: “If you are at least 10 years from giving up work, a medium to high growth plan that comes with a bit more risk is likely to generate higher investment returns than a cautiously invested plan.

“Many schemes automatically ‘lifestyle’ older workers into more cautious plans, however there is controversy over this as it means some savers may miss out on the opportunity to maximise growth.

“It’s worth checking to see if you have been moved into a more cautious set of investments unnecessarily early, based on your circumstances.”

Another tip is to combine your pensions if this is appropriate. The group said: “With at least 4.8 million pension pots considered to be ‘lost’ in the UK, it’s important to keep track of all your old workplace pensions to ensure you’re not missing out on any hard-earned savings.

“Combining your old pensions into one can help you assess if you’re on track for the lifestyle you want in retirement, or if you’ll need to increase your contributions.”

The Government website has a tool you can use to try and find details of a lost pension.

For the latest personal finance news, follow us on Twitter at @ExpressMoney_.