Annuity provider Just Retirement has reduced its minimum fund size to £2,000.
It said the cut, from £5,000, was in response to a Financial Conduct Authority (FCA) study into the retirement market, which identified a lack of options for retirees with small fund sizes.
Just Retirement director Stephen Lowe said: "Right from the start we have had one of the lowest minimum fund sizes, but we've taken the decision to reduce this to help even more people have the option of underwritten rates."
An FCA probe into the annuities market indicated parts of it were not working well for some consumers.
In particular, it found eight out of ten consumers who purchased their annuity from their existing provider could get a better deal on the open market.
Last year, the National Association of Pension Funds warned employers were reluctant to set up advisory services to help staff choose appropriate annuity products due to costs. It also said lower profits available to advisers and providers on small pension pots was a factor in consumers not getting the best deal.
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