The changes follows radical reforms announced by Chancellor George Osborne in the Budget yesterday that will allow people to take their entire pension pot as cash from age 55. The new rules will apply from April next year.
In response to the change, Standard Life has cut its drawdown minimum pension pot size from £50,000 to £30,000. The provider says it believes more people will use drawdown to “bridge the gap” between now and the new rules coming into force.
Standard Life head of customer income solutions Alastair Black says: “The Chancellor announced some of the most significant changes to the retirement marketplace ever. The main changes won’t come in to force until 2015 and some people might be considering delaying their retirement until then, to benefit from the increased flexibility and control.
“Standard Life believes drawdown will help to bridge the gap and put people in a strong position. By using drawdown, they can take an income that supports their needs in retirement, while ensuring their pension pot remains invested.
“When the pension rules change they can then review their strategy. The flexibility and choice offered by income drawdown allows them to do that.”
An Aviva spokeswoman confirms the provider has also reduced its capped and flexible drawdown minimum investment size from £50,000 to £30,000.