A recent government white paper on the pensions and retirement savings gap cited personal accounts, an additional savings vehicle for retirement funds, as a way to avoid the looming pensions “crash” that could occur as the average age of the UK population increases.

Stephen Haddrill, the director general of the ABI, said that despite the widespread doubts surrounding the proposals, his organisation was very positive about the system’s potential.

“The insurance industry is enthusiastic about the government’s plans for personal accounts,” he said.

“Our proposals for implementing them will lift overall levels of saving and help increase incomes in retirement, particularly for people on low or modest incomes.

Mr Haddrill added that to combat the doubters, the ABI had “talked with employer organisations, consumer groups and other parts of the financial services industry…to ensure that our proposals address their concerns”.

Potential problems over the plans include high administrative costs and a possibility of the misplacement of the correct target audience, he added.

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