The vast majority of people in the UK are not saving enough to pay for the sort of lifestyle they expect in retirement, the Institute of Directors has said.

A paper published today blames both the Government and individuals for the number of "under pensioned" people in the UK.

But the business organisation rejects calls from some quarters for compulsory employer contributions saying they would be an "additional burden" on employers and could lead to "levelling down" with companies paying only the bare minimum.

It also said it was not convinced that raising the retirement age would solve the problem but called for a debate on the issue.

The paper blames a combination of factors for the situation, including inadequate savings, falling stock markets and lower rates of return based on the fact that people are living longer.

Ruth Lea, head of the policy unit at the institute, said: "There is no doubt about it, there is a pensions crisis in this country in the sense that the vast majority of people do not have enough pension provision to fund the sort of lifestyle they would wish to lead in retirement."

She said the Government's decision to remove tax credits on share dividends was partly responsible for the falling rates of return on savings.

She called on the Government to restore the tax credit on dividends and introduce measures to boost savings.

She said: "We doubt the Government recognises the scale of the problem, we doubt if they recognise there is indeed a pensions crisis."

The paper was launched by the organisation as a response to the Government's consultation on pensions provision.