Warning of a "pensions timebomb", Michael Howard has pledged a £1.7bn tax relief scheme to encourage people to save for their retirement.
In a keynote policy announcement, the Conservative leader said the government had "penalised people who do the right thing and save for their retirement".
"Britain today faces a pensions timebomb," he told a London press conference.
"Nearly half of Britain's workforce are not putting any money aside for their retirement."
Warning that "doing nothing is not an option", Howard said it was time for a government which would "act to reward families who help themselves".
"In our first Budget a Conservative government will act to boost savings by giving people extra tax relief on their pension contributions," he said.
Retirement boost
Under the party's plans the state would give an extra £10 for every £100 saved in a pensions scheme by a basic-rate taxpayer.
Howard said this could lead to a boost of up to £500 a year when someone retires.
"Under our scheme people won't get something for nothing," he pledged.
"They'll only get something out when they put something in."
The Conservative leader also said that he would not move to introduce compulsory savings for pensions, and ruled out increasing the retirement age in the next parliament.
Shadow work and pensions secretary David Willetts said: "We're saying there should be better incentives to save.
"We're going to use a large amount of money to reward people for putting money into their pension schemes.
"I think that's the right thing to do. That's tackling one of the biggest long-term problems that our country faces."
Willetts said Labour had pledged "virtually nothing" on pensions, other than ruling out compulsory saving.
Savings and pensions were one of eight areas identified by the Conservatives as areas of taxation where reform was needed.
They have already announced a 50 per cent council tax discount for households where adults are all aged over 65, up to £500.
Economic disaster
Labour campaign chief Alan Milburn said Conservative plans were "a recipe for the kind of economic disaster they gave us the last time they were in power".
The issue of running of the economy was of fundamental importance, he said, warning that Tory policies were "a risk the country cannot afford to take".
Transport secretary Alistair Darling also said the Tories "do not have this money to spend" on pensions.
He added that they "cannot afford their tax cuts without even bigger spending cuts than they have promised before or increased borrowing".
Liberal Democrat Treasury spokesman Vincent Cable said Tory tax plans were unworkable.
"The Tories say they will spend more on schools, hospitals and defence, cut taxes and balance budgets all at the same time. This is implausible and unachievable," he said.
"In fact under Tory plans the tax take will rise by £24bn and their policies will increase council tax by £200 per household.
"People are unlikely to be convinced by this desperate attempt to buy votes with cheques that will bounce."
