The Association of British Insurers is working on a proposal for an income drawdown comparison tool.
It would allow consumers going into drawdown on a non-advised basis to compare products on the market.
The ABI has said it would like to see the tool offered by a third party such as the guidance body which eventually replaces the Money Advice Service.
But the ABI has said its efforts have been hampered by the definition of advice.
Tiffany Tsang, the ABI’s policy adviser for retirement and savings, said that for the tool to be most useful, it would have to provide some form of income projection.
She said: “A key problem we have come across is the difference between advice and guidance because it would not be legal for our members to provide any service that goes into advice.
“In an ideal world everyone should have a bespoke projection for their income but that is advice and we have to be very careful with this tool. We think about it every time we discuss this proposal.
“We are going to try and push the boundary to bring it as close to something people can relate to but keep it in guidance.”
She said one possible solution would be to have case studies to help people understand how they could draw down their pension pot.
Ms Tsang acknowledged that some people might think consumers shouldn’t go into drawdown without advice, but she said this wasn’t a decision for the ABI.
She said: “That’s not a choice for us to make because people have these freedoms.
“It is not for us to say how people should access them.”
Ms Tsang said comparing drawdown products was “complex” but said the ABI had come up with six criteria they could be compared by.
These included fund choice, flexibility of access, guarantees and customer service.
She added that the ABI is also attempting to factor cost into this tool but said this was proving particularly complicated.
Ms Tsang said: “We have not discounted using charges as a point of direct comparison but as they stand now they are not directly comparable.
“The way products have been charging, a lot of it comes from the history of how the product developed over time.
“A product might have one fee but that might change depending on how much you draw down over time.”
Ms Tsang added that the ABI hoped the tool would draw attention to other aspects of these products such as fund performance and flexibility.
She said the ABI is hoping to have the proposal ready by the autumn.
Simon Torry, a chartered financial planner at SRC Wealth Management, said: "I think it is an excellent idea. The more information available to the public the better.
"There is a danger that if people don't take advice and use a DIY approach there could be issues further down the line, so if people are using drawdown as their main source of income advice will be the best option."
