In the wake of the pension reforms, Thomson Reuters decided a drawdown option was a must-have. Jenna Gadhavi finds out why.

Thomson Reuters was one of the first occupational defined contribution plans to offer drawdown in-house. The main reason for this approach is because the scheme is taking a long-term view of its membership’s needs, says Matthew Webb, its head of international benefits.


When the pensions freedoms were first announced in 2014, the scheme carried out analysis on pot sizes and concluded that even though they were small at the moment, projections make the case for offering members drawdown.

Drawdown would be an interesting option for a high proportion of our membership”

“Even if the amounts in DC pots weren’t particularly high, if people stay with the company, they would be when they retire, so it was felt that drawdown would be an interesting option for quite a high proportion of our membership,” Webb explains.

While many schemes have opted to provide access to drawdown through a preferred provider, Thomson Reuters has taken the bold decision to give members access through the scheme itself.

According to Webb this decision was based on three factors, which he describes as the ‘three Cs’.


The first is cost. The scheme found that an institutional approach was generally more cost efficient than going to the retail funds.

Meanwhile, Webb says the scheme has managed to get a good deal with drawdown: “We’ve been able to secure what we believe is a fair arrangement with our third-party administrator to manage drawdown.”

The next ‘C’ is continuity. Webb highlights that for members who have an investment strategy while they are working and want to make the transition into drawdown, it makes sense for them to be able to continue in the same plan with the same funds – into and through retirement.

We know that the large majority of DC members don’t like making decisions”

Finally, there is convenience. “We know that the large majority of DC members don’t like making decisions,” says Webb. He believes that because of this inertia, members will prefer to have the option of remaining within the plan to take what might be their best option.

Before implementing the drawdown option, there was a lot of discussion between the employer and the trustees. Webb says: “It was felt that if we were going to offer this option from within the plan, it needed to go hand in hand with more education about options.” As a result of this feedback, the scheme decided to work with a third-party financial education provider.


Thomson Reuters believes that some natural engagement occurs when people reach 50 because the pot sizes are larger and retirement is closer. So the scheme has created a strategy based on targeting members at this point, inviting them to seminars and workshops around their options. The hope is that members then start thinking about an appropriate investment strategy.

Thomson Reuters has not yet updated its default investment fund, partly due to the administrative changes needed to set up a drawdown option, but also because it has yet to find the products in the market.

“The way that has worked is that we have a lifestyle default option, and its asset allocation elements have been changed to reflect the fact that if someone wants to opt for drawdown the allocation to the different equity/ bonds/cash splits would change as well,” says Webb.