British society is, in effect, sleepwalking into a financial future for which it is ill prepared

Sir John Banham, chairman of the inquiry

The Institute believes that providing such advice would prevent the financial timebomb facing many people in their old age, because it would encourage them to think about their finances and save for their retirement.

It also said that through free market principles, the entire financial services industry could benefit.

It believes that with more people having access to financial advice, companies would be forced to offer higher standards of service and greater transparency.

The recommendations are central to a new report "In Place of Micawber: Empowering Financial Consumers" which will be presented to government officials and regulators on Thursday.

It was commissioned in response to a growing concern from the government and industry bodies that people are not saving enough for their future, and has been led by Sir John Banham, chairman of Kingfisher - the retail giant.

Sir John said: "It is now commonplace for employers to offer their staff access to services such as medical health checks as an employee benefit. Providing access to financial advice would operate in a very similar way."

At the same time, the institute believes that the move would be good for businesses because it would improve retention rates and promote companies as caring and supportive employers.

Growing concern

Sir John said: "British society is, in effect, sleepwalking into a financial future for which it is ill prepared."

According to the report, less than one family in five is making adequate financial provision for old age.

It says that this is Britain's "wake up" call for the crisis facing many people in the future.

Government and industry bodies are becoming increasingly concerned with how little people are saving for their retirement.

Institute of Actuaries says there is an urgent need to review annuity rules

Low inflation combined with poor stock market performance are diminishing returns from pension funds.

Each �1,000 invested in UK equities between 1973 and 1993 returned on average �5,800. But the same amount invested today would be worth only �2,200.

And a 45-year old needs to save 2.5 times more than his father to secure the same pension in real terms.

Sir John believes that part of the problem can be resolved through an urgent review of current annuity rules.

Private pension holders must use 75% of their pension fund to buy an annuity by the time they are 75 years old.

But purchasing an annuity effectively eliminates the possibility of passing on any capital to children - and condemns pensioners to a fixed income for the rest of their life at the rate when they bought the annuity.

At present, annuity rates are very low because of stock market conditions - and many people are having to put off retirement altogether until the situation improves or semi-retire.