Historically you needed around £150,000 or above to use income drawdown at retirement. One of the reasons was that many providers charged an annual fixed cost, which meant those with lower value funds would see a higher percentage of it eroded away by charges. Over the past 18 month however things have changed.

Due to the competition from providers to try and retain or attract pension funds, many have reviewed and removed the higher barriers to entry. Companies had a minimum pot size to enter drawdown which prevented those with lower funds being allowed to enter it.

Now that the new pension reforms have taken effect, drawdown seems to be the product everyone wants to use. Its flexibility and ability to keep assets within the estate on death make it an attractive proposition. It’s being used by many to reduce an income tax liability by spreading withdrawals over different tax years.

Providers have now started to take notice and moved their focus to try and attract a new, previously untapped market. Where previously a minimum fund value for entry was high, this has started to be reduced by the main providers. LV have recently removed their minimum requirement altogether effectively capturing the market over the larger life companies. Other providers are as follows

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There really isn’t a minimum amount to go into drawdown but there needs to be an understanding what exactly drawdown does. As well as being a facility to withdraw income, it’s also an investment. It’s important to match the investment with your own outlook and attitude to investment risk as any tax saving made withdrawing over a number of years may be wiped out by negative investment returns.