Key Retirement claims D2C service will lead to advice
Key Retirement is launching a retirement options service ahead of the pensions reforms due in April this year.
The new service, which will launch in February, will outline all the main options for clients, and the firm said it would highlight the risks and relevance of each in a format personalised to each consumer.
At the beginning of the service will be the Retirement Options Report, which will be provided free of charge.
The firm said this report would allow for a much greater understanding of the relevant options available, enhancing consumer understanding and leading onto regulated advice, and the protection that comes with that.
Key Retirement’s new service comes in the wake of a research paper published by the International Longevity Centre and partly funded by Key Retirement called ‘Making the system fit for purpose.’
The paper revealed widespread confusion around retirement income options.
The research highlighted a number of important findings, Key Retirement said, including 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 report also highlighted low levels of understanding around the implications that certain new freedoms may bring - with just one in five over-55s with defined contribution pension pots knowing what a marginal tax rate was - while only half understood what an annuity is and just one in four knew what drawdown is.
Elsewhere, the report found that one in 10 believed they should withdraw all their money in one lump sum to limit tax bills.
Dean Mirfin, group director at Key Retirement, said: “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.
“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.”
ruth.gillbe@ft.com