It has been revealed that a financial educational tsar, or commissioner may be launched, in a bid to help the public understand financial matters.

The statement stems from a nine-month inquiry, jointly chaired by Andrew Moss, chief executive of an insurance group and Chancellor Alistair Darling.

Its findings will be reviewed by the government and could provide the basis for a major reshuffle.

The commission could work similarly to one in New Zealand, which established a retirement commission in 1993 charged with helping people prepare financially for retirement via promotion, education and information.

The report also focuses on Great Britain’s insurance industry and will encourage individuals to save for their retirement and life insurance, to protect them from unemployment or illnesses.

Factors highlight need for life cover

The 65-page document paints a depressing portrait of a country that saves too little, but also faces new challenges with people living longer, and extreme weather conditions becoming more common.

The document also largely looks at insurers providing for more of people's needs, including ill-health and unemployment and reducing the role of the state. This would only be possible if the government were to be on its knees from mounting debt due to the recession and increasing liabilities linked to longer life expectancy.

If life insurers expanded their share of total risks, which includes occupational pensions and healthcare, by just 5% "the corresponding saving for public sector risk could be almost £17bn a year," the report stated.

According to the report, financial education in schools is of extreme importance and must be protected.

The report says consideration should be given to appointing a financial education commissioner “to act as the central co-ordinating body for government; the commissioner should work with the whole financial services industry to improve all aspects of financial education and literacy, including in the context of the national curriculum, and develop a trusted financial education and information service”.

The document expresses concerns and worries that people do too little to cover themselves via a life insurance policy.

For example, many have no protection in place to provide for themselves and their family should the primary income earner lose their regular salary. "The percentage of the UK population that holds life insurance has decreased significantly, from 61% in 1996 to 39% in 2006," it stated.

Help in the older years

It is thought that the main reason behind this action is because consumers see it as the states duty to provide for people in their old age.

Furthermore, the financial downturn has forced people to cut ties with their insurance cover, in a bid to save money.

Research by a financial group revealed that one million customers have either reduced the amount of cover needed or cancelled their policy completely. Over half a million are estimated to have cut their life insurance protection for the same reasons.

Other figures underline the effect of the recession in savings and pension provision with 83% of the annuities sold in the second half of last year bought with pension jars of £40,000 or less, producing income of under £60 a week.

"This behaviour will increase the risk that people will not have done enough to meet their needs in retirement, or to cope with risk," says the report.