Advisers must make customers understand their decumulation choices are as important as initially saving towards a pension fund, says Aegon.
The insurer is calling for a complete review of how people decumulate their assets following research suggesting a high level of ignorance about all but the most common income options.
"People firmly believe accumulation is the main determinant of their financial well-being and have limited awareness of the importance of their decumulation choices," says Jean Taylor, associate fellow at OPM, which carried out the research for Aegon.
Income decisions focus on annuities and when to draw down pensions for the majority of people, with most participants in the study unaware of alternatives such as unsecured pensions or phased retirement options, she says.
In effect annuities with higher monthly incomes become a default option so people miss out on the benefits of index-linked annuities through failing to shop around for the best deal, the research suggests.
Aegon says people need help moving away from the "traditional" idea of an idealistic retirement spent "gardening, playing golf and spending time with the grandkids", towards an "evolved" idea of retirement as a time for active financial management.
"We - advisers, product providers, the whole industry - need to learn from people's behaviour, how they view their own retirement journey then translate that into solutions and give people the confidence to use them," says Rachel Vahey, head of pensions development at Aegon.
At the moment legislation, taxation, public processes and the financial services market are still all wrapped around the traditional view of a single point of retirement, she says.
But increasing longevity means many Britons are now entering into a "pre-tirement" period after full-time work when they want some income from their assets before locking down benefits during full-time retirement, the research suggests.
Tom McPhail, pensions research manager at Hargreaves Lansdown, added policymakers often worry giving people more flexibility with their pension will lead them to spend their savings before "throwing themselves at the mercy of the State".
But Vahey says the research suggests there is little evidence people want to rely on the State: "People are very much aware of the risks but are not sure what to do about them."
"We can not just give people more information. They need more help and guidance," she says, adding it is a "nice coincidence" Aegon's research coincides with the Government's Financial Services Bill, published today.
The creation of a Consumer Education Authority to help people navigate the world of financial services is a key inclusion in the Bill.
Caring for children and elderly relatives
Similar to June 2007
Square Mile’s series of informal interviews
Fine reduced to £60,000
Two roles created