A gap in financial knowledge could impact the retirement savings of a huge number of people, according to a new report from MetLife UK.
The report, Guaranteeing Real Pension Freedom, showed nearly half (45%) of over-40s are concerned that a lack of guaranteed income choices is driving people to take risks with their money.
It also found one in five retirement savers (20%) don't fully understand the choices they face, which would help them receive the level of retirement income guarantee they are looking for.
The report suggests the Government's plan to launch a new financial guidance service in place of Pensions Wise and the Pensions Advisory Service provides the ideal opportunity to refocus on explaining all retirement income choices, together with their risks.
Simon Massey, wealth management director at MetLife UK said: "Our research has uncovered a worrying gap in knowledge which has the potential to massively impact the retirement savings of a huge number of people."
"Despite almost half of savers taking more risk because of a lack of guaranteed income solutions for life, one in five admit they don't understand the choices they face to generate this retirement income – however, if they were confident, they might see there are ways of obtaining the guarantees they want."
Massey went on to say that MetLife believes retirement conversations need to change to include a wider range of options.
"Anything that encourages this, including guarantees and guaranteed drawdown to form part of the new framework, should be supported across the board" he said.
The report also showed that around 75% of retirement savers say having a guaranteed level of income in retirement and flexibility is important.
Around 26% want all their retirement income guaranteed for life, and they are supported by advisers who believe clients should have at least 37% of their income guaranteed.
The report covers four specific sections.
The first section sets the scene by analysing pension freedoms and the second section examines the current status of drawdown options.
The third section highlights the growing need to expand the retirement conversation to include guaranteed options and the final section moves into setting out the case for need for real change to ensure the future success of pension freedoms.
First published 03.02.2017