In February Key Retirement will introduce a new Retirement Options service.

This follows a research paper published by the International Longevity Centre (ILC) “Making the system fit for purpose”, which Key helped fund, which revealed widespread confusion around retirement income options. The research highlighted a number of important findings, that consumers have a good insight into what they want to achieve for their finances in retirement, but at the same time had a wide knowledge gap in terms of how to achieve this.

The ILC report also highlighted low levels of understanding around the implications that certain new freedoms may bring; just one in five over-55s with defined contribution pension pots knew what a marginal tax rate was while only half understood what an annuity is and just one in four knew what drawdown is.

Other findings included one in 10 believing that they should withdraw all their money in one lump sum to limit tax bills.

Key said its new service will outline all the main options for clients, highlighting the risks and relevance in a format personalised to each consumer. The first stage of the service; the Retirement Options Report, will be provided free of charge.

“The ILC report shows there is considerable confusion about retirement income options but that people do have a good idea of what they want to achieve, which, for the vast majority, is a safe guaranteed income, but they do not know how to get to the right outcome,” said Dean Mirfin, group director at Key Retirement.

“Once they have a good knowledge of their options – and importantly the consequences some may have – they can see the value of advice in helping them achieve what they want.”