The Association of British Insurers (ABI) has outlined steps to create a drawdown comparison tool as it asked for joint action from the pensions industry and regulator to bring the tool to life.
The body believes the tool should be made available by the single financial guidance body (SFGB), which will launch later this year.
But to make the project happen the market will need some form of standardised presentation of costs and charges data, the ABI stated.
This will require an agreement about the assumptions or scenarios that could be used to enable a simple, but meaningful comparison of products, the trade body said.
Another element is the development of ‘consumer profiles’, based on risk and retirement strategies, that will provide scenarios for customers to allow for a more personalised decision about the retirement journey, according to the ABI.
The body is keen to ensure the tool doesn’t stray into providing financial advice.
Instead, it should point customers towards other retirement products, or where they could access financial advice, should their circumstances suggest that these might be beneficial, the ABI stated.
Rob Yuille, head of retirement policy at the ABI, said: "The pension freedoms have thrown up a vast set of new retirement options, and consumers need more help to understand their options and compare between them.
"This is not just a one-off decision, but needs to be based on their overall goals for retirement."
He said a drawdown comparison tool would help ensure consumers have the resources to choose the right option for them based on their needs, not just price.
While advisers already make recommendations based on a comparison, non-advised customers will find it harder to compare products themselves, either before or while they are in drawdown, Mr Yuille said.
The Work & Pensions select committee had called for a new form of standardised drawdown to protect pension savers and for providers to be forced to offer the product in its report on the pension freedoms out in April.
The committee stated the introduction of a default decumulation option alongside a fully functioning pension dashboard would support savers in both accumulation and decumulation.
But providers have been critical about the proposal, arguing it was inappropriate to treat drawdown customers with a one size fits all approach.
The ABI had already worked on drawing up a proposal for an income drawdown comparison tool in July last year but at the time said its efforts were hampered by the definition of advice.
It has now recommended eight projects must be completed in order to enable the single guidance body to create the tool:
Project 1: Consider how the tool should fit within the broader guidance journey, which would be the responsibility of the SFGB.
Project 2: Agree how data on costs and charges could be standardised and presented. This should be agreed between the FCA and the industry.
Project 3: Reach consensus on whether and how to establish risk profile/capacity for loss. This project could sit with the FCA.
Project 4: Use existing calculators to help compile consumer profiles. Oversight of this project could be given to the SFGB.
Project 5: Reach consensus on the best ratings to compare customer service and features, or develop a new one if existing ones are not sufficient. This would require a collaboration between the SFGB and the industry.
Project 6: Agree governance and data standards for the site. This would require a collaboration between the SFGB and the industry.
Project 7: Create accessible information on drawdown products, their benefits and risks, responsibility of which may best sit with the SFGB.
Project 8: Undertake consumer testing and finalise interface design to reflect behavioural economics research around effective consumer usage of websites. The ABI recommends that this is owned by the SFGB.