Railways Pension Trustee Co. appointed Legal & General Investment Management to provide a drawdown option for its defined contribution plan, a spokeswoman confirmed.
Participants enrolled in the Industry-Wide Defined Contribution Section, which is the DC section of the £32 billion ($45.1 billion) Railways Pension Scheme, London, who choose the drawdown option will now be enrolled into the Legal & General WorkSave Mastertrust at retirement. Assets will be invested through LGIM's Retirement Income Multi Asset Fund.
Participants will have their savings transferred into LGIM's master trust only when they want to access their benefits. They can still choose their own drawdown providers at retirement or other strategies.
It is the first time that the trustees chose to offer a decumulation option to DC participants.
The new drawdown option gives participants a flexible way to access their retirement funds, the spokeswoman said. She noted that an increasing number of retiring DC participants are selecting drawdown arrangements, while the number choosing annuities is falling.
Since a 2015 reform under the Pension Schemes Act 2015, DC plan participants in the U.K. can access one of three options at retirement: cash, drawdown or annuity. Previously participants could only select an annuity.
"We know that more members are exercising pensions freedoms than ever before, and an increasing number are using drawdown arrangements. Historically, members would have been exposed to the open market where finding the right product can be difficult and charging structures may be penal," Chris Hannon, chairman of the trustee board, said in a news release.