Enhanced annuity specialist Just Retirement has reduced its minimum fund size to £2,000, claiming to be the lowest minimum of any specialist enhanced annuity provider on the open market.
The reduction from £5,000 follows a review of the annuities market by the Financial Conduct Authority which found a lack of competition and options for retirees with smaller pension funds, leading to lower retirement incomes.
The FCA’s thematic review found that 27 per cent of annuities sold to existing customers in 2012 were for fund sizes of less than £5,000, and that “it is clear that those with small pension funds are not well served in this market”.
Stephen Lowe, group external affairs and customer insight director at Just Retirement, said: “The FCA made it clear that where pension savers shop around for their retirement income, they are fare more likely to achieve good outcomes.
“Unfortunately large numbers accept what their own pension provider has to offer and eight in 10 of them end up worse off as a result.
“Our move should provide extra confidence that shopping around, even with modest pension pots, is definitely worth the effort. This is particularly true where there are health or lifestyle factors involved that could make a big difference to the income being offered.”
Last week (28 February), Just Retirement announced profits “in line” with expectations despite showing a dip compared to the previous year.