It's a time for leadership and statesmanship from government

Mary Francis, director general of ABI

Mary Francis, director general of the Association of British Insurers, which represents 97% of insurance business in the UK, said that it was a time for "steady nerves and facing up to fundamentals", following recent stock market falls.

The ABI believes that Britain's �27bn savings gap could be cut by at least �10bn under proposals unveiled on Tuesday.

Mrs Francis, speaking to the All-Party Insurance and Financial Services group, admitted that the financial services industry had to "work very hard... to win back the trust and confidence of its customers" following recent scandals.

Action plan

The ABI believes that improving regulations for the selling of savings products could reduce the savings gap by �4-�5bn.

It is also proposing a new incentive for employers to offer or make available financial advice in the workplace, particularly around their company pension scheme.

What is the long-term savings crisis?

The ABI estimates that there is a �27bn 'savings gap' between the extra amount that people need to save each year to achieve a reasonable income in retirement

It estimates better consumer information, provided in this way, could save �2bn.

While a Pension Contributions Tax Credit would encourage employers to contribute to employee pensions and would reduce the savings gap by around �3bn, Mrs Francis said.

In recent months, there has been growing concern over whether people are putting aside enough money for their old age.

The ABI has estimated that the gap between the extra amount that people need to save each year to achieve a reasonable income in retirement is �27bn.

Reports due

A number of government commissioned studies, which will make recommendations about how to close the gap, are expected to conclude shortly.

"Long-term saving has never been more important for every one of us," Mrs Francis said.

Mrs Francis said that this was "a time for leadership and statesmanship from government.

"It is also a time for the financial service industry to show the same qualities. This is the time for steady nerves and facing up to fundamentals."

"The proposals for change I have outlined today will only work if the government and regulator play their part as well," she added.