The Money Advice Service aims to launch a prototype version of a drawdown comparison tool aimed at non-advised, mainstream customers in spring next year.
The guidance body’s senior policy manager Teresa Fritz shared details about the tool that is being designed in collaboration with the Association of British Insurers.
Speaking at a Westminster Business Forum seminar on post-pension freedoms today in London, Fritz says the tool in its final form will show users several charges.
These include real time information about how much it would cost an individual to leave their fund, annual charge and starting fee to set up drawdown.
MAS wants the tool to be included in pension providers’ investment pathways when they are established to help consumers understand what type of investor they are.
This should help make guidance more effective and nudge consumers towards speaking to a regulated financial adviser for drawdown.
Fritz says the design of the tool is challenging as any drawdown journey is complicated, while MAS has to be careful about giving information about certain charges.
Fritz uses the example of giving information about fund charges to consumers via the drawdown tool, saying this would be a product recommendation and would therefore stray into advice.
She adds the biggest problem the guidance body has encountered in its work on the tool is people who take 25 per cent of their tax-free cash need to understand what they are doing better.
Fritz says responsibility for the drawdown tool will be transferred to the Single Financial Guidance Body once it is established in 2019 and there is no reason why it could not be included in the pension dashboard.