On 17 and 18 July, we held information sessions for former employees and pensioners. During this session, they were updated about the recent developments in our pension at Shell.
You can watch the session via this video.
Presentation for pensioners and former employees
Shell’s new pension scheme
Shell’s new pension scheme and transitional measures
On 1 July, Shell Nederland and the Central Staff Council (COR) submitted the transition plans for the SSPF pension scheme and the SNPS pension scheme(s) to the pension funds. This concludes the employment conditions consultation and means that an important milestone has been achieved! The transition plans (in Dutch) can be found here. English versions will soon be available.
In recent months, Shell Netherlands and the Central Works Council (COR) have worked closely with the boards of the pension funds and with the association for pensioners/deferred members, Voeks, to arrive at a balanced and future-proof pension scheme and associated transition measures. In that context, Voeks, through the Voeks Hearing Rights Committee (the VHC), exercised the right to be heard. At the beginning of May, Shell Netherlands and the COR received Voeks’ opinion. You can read how that judgment was taken into account in the final decision-making process in this response from Shell Netherlands and the COR.
Through various information sessions, Shell Netherlands and the Central Works Council have informed employees over the past few weeks about the intended plans for the transition to a new pension scheme. It is good to see that employees generally respond positively to these plans. Now that the COR has agreed, the consultation has been completed and we are ready to enter the next phase. In this phase, more information (including an extra virtual information session) will be shared with former employees (dormants and pensioners) in which the new pension scheme and the transitional measures will be further explained. This group will shortly receive an email invitation to subscribe for the virtual information session.
What is important to know?
- The new pension scheme is a good and flexible pension scheme with a higher contribution that contributes to a higher pension.
- Shell Nederland requests SSPF to do a value transfer of the accrued and existing entitlements of all members, i.e. these entitlements will be converted to the new pension scheme. As a result of the release of buffers from the fund’s assets, all SSPF participants (active and inactive) will receive an increase in their pension at the time of the transition.
- Changes in pension accrual are subject to favourable transitional measures for existing members with full compensation through salary or within the pension scheme.
- Your surviving relative(s) or in case you become incapacitated for work will be well taken care of at a comparable or better level compared to current agreements.
What does this mean for you?
You are currently an active or inactive participant in one of our gross pension schemes. These pension schemes are administered by SSPF and SNPS.
If you were employed before 1 July 2013, you are a participant in the SSPF scheme.
- Your pension agreement will change with effect from 1 January 2027.
- This means that you will accrue pension in the new pension scheme from 1 January 2027.
If you were employed on or after 1 July 2013, you participate in the SNPS scheme.
- Your pension agreement will change with effect from 1 January 2026.
- From that date, you will accrue pension in the new pension scheme.
Both gross schemes apply to a maximum salary level. If your salary exceeds that maximum you may participate in the net pension scheme, which is administered by SNPS. In that scheme you accrue your pension from your net income. In that case, your pension agreement will also change for the net part with effect from 1 January 2026.
The amendment of the pension agreement is accompanied by excellent transition and compensation measures.
For participants in the SSPF scheme, it is important to know that the plan is to convert the pension entitlements that have already been accrued. At the time of the transition, all participants (active and inactive) will receive an increase in their pension as a result. This is ultimately decided by the SSPF board.
What’s next?
The transition plans for SNPS and SSPF were submitted to the pension funds on 1 July 2024. The pension funds now have some months to assess whether the transition (the new scheme, de transitional measures and the conversion of the accrued pension rights, including the distribution of the funds) is in its entirety balanced and executable. We expect a reaction in the course of 2024. We will of course keep you informed.
Information and communication
For the details of the decisions taken, such as the new pension scheme and the compensation and other measures, we refer to the transition plans that have now been posted on the website (ref above link). More information can also be found on the www.nieuwpensioenbijshell.nl website, including the slides and recordings of the recently held information sessions. The pension fund will soon provide more information about the extra virtual sessions that is being planned for former employees and pensioners.
We understand that you would like to know exactly what this means for you. There are several examples that give you an indication. You will receive more information about the exact consequences for your pension from the pension fund in due course.
Finally
Pensions and the transition of pension schemes are complex, but also important topics. Therefore, take the time to read or listen to more about it. Because we have financially healthy pension funds, this pension transition offers opportunities for all participants, active and inactive. In the interest of the participants, we have managed to take advantage of these opportunities. We are therefore proud of the new pension schemes and the transition and compensation measures that we, together with the COR, have designed for our employees and former employees.
Once again, we would like to thank the COR and Voeks for their constructive and thorough contribution in this complex dossier.
Slides and recordings information sessions
In June 2024 several information sessions were held to update you on the upcoming changes in our pension plans. You can find the slides and the recordings on Viva Engage (only for Shell employees). We will soon update the FAQ-document with the received questions.
Important step in the process
Last week, Shell NL and the Central Staff Council took an important step in the process in the transition to the new pension system (‘Wet toekomst pensioenen’). After an intensive period of working closely together and going through the process with the hearing committee, the request for consent was submitted to the Central Staff Council last week. This request for consent builds on the outline agreement reached late last year. This is an important milestone in the process. Shell NL and the Central Staff Council have also started information sessions for all employees in which they will be updated on the changes in the pension plan.
We expect the response of the Central Staff Council by the end of June. After completion of the consultation process, the transition plans will be finalized and made available on this website. The transition plans will also then be sent to the pension funds for assignment acceptance and further implementation. The transition plans, which are required by law, are rather technical documents in which all choices, alternatives and considerations are described. More accessible versions will also be made available to the various participant groups.
New personas
During the information sessions in the summer of 2023, we have shown the differences between conversion (invaren) and hard closing (hard sluiten) on the basis of various personas (maatmensen). At the request of you and the Central Staff Council, these insights have been expanded and we have developed new personas.
In this interactive PDF file, you can see what conversion or hard closing can mean for the personas. The graphics and diagrams provide insight into the possible consequences of conversion or hard closing the fund and how these can play out over a longer period of time. This serves as background information; during the information sessions, you will be informed on what choices Shell Nederland and the COR have made and why. The insights following from this interactive file will be useful to better understand the information that will be shared during the upcoming information sessions.
Be sure to watch this video that explains how to read the graphics and diagrams.
The figures we show here are based on the financial situation of the fund as at 31 December 2023 and the assumptions and distribution rules that we have in mind in the context of the transition. No rights can be derived from this. Adjustments can still be made and will also affect the graphics and diagrams shown. The final decision on conversion or hard closure lies with the board of trustees.
We hope to see you at the information sessions! For more information about dates and locations, see this post (only Shell employees).
Update future of pensions act
In our previous update we indicated that we had made great progress in the process to get to a new pension scheme. Meanwhile we have reached the next stage in which the VOEKS (association of former employees of Royal Dutch Shell) Hearing Right Committee (‘VHC’) will exercise the so-called hearing right and will give its opinion on the proposal for a new pension scheme and the transition thereto. We expect to hear more from VOEKS early May.
After this the intended proposal as discussed with the Central Staff Council (COR) and with the VHC will be presented through a formal request for consent to the COR. This request for consent will be published by the COR and at that moment we also give more information on our intended new pension scheme and the transition measures. Information sessions will again be organized at a number of the locations in The Netherlands. Also virtual sessions will be held, both in Dutch and in English. More information on these information sessions will be shared soon.
In addition to the hearing right of the VHC and the consultation of the COR, we will continue the preliminary discussions with the Boards of the pension funds (SNPS and SSPF). The Boards of the pension funds do have the duty to assess the new pension scheme amongst others on executability and it being balanced. We aim to implement the changes in the SNPS-scheme as per 1 January 2026. For the SSPF-scheme that will be 1 January 2027.
Update FPA on behalf of the COR and Frans Everts
The Central Staff Council (‘the COR’) and Shell Netherlands (‘Shell NL’) have been regularly and constructively discussing the future of our pensions for some time now. The reason for these is the new Future of Pensions Act. Good progress has been made and that means we are entering the next phase. In this phase, the VOEKS (‘Association of former employees of Shell’) Hearing Rights Committee (‘VHC’) will exercise its so-called legal “hearing right” and give its opinion on the draft transition plan that reflects the proposal for a new pension scheme and the transition.
This opinion will then be taken into account by the COR and Shell NL in the follow-up discussions. This will take some time. After this, the intended proposal as discussed with the COR and with the VHC will be submitted to the COR via a formal request for consent. The consent of the COR is needed before any changes can be implemented. We will therefore only be able to provide more information about our new pension scheme and the transitional measures in a few months’ time.
In addition, in this next phase, we will also continue the iterative and preparatory discussions with the boards of the pension funds (SNPS and SSPF). The boards have the task of assessing the new pension scheme for feasibility and balance, among other things. This means they must assess whether all interests have been properly weighed in the process. To this end, an internal decision-making process takes place within the funds. After the decision of the funds, the new scheme will have to be implemented. We aim to implement the changes to the SNPS scheme by 1 January 2026. For the SSPF scheme, this is 1 January 2027.
Both the COR and Shell NL appreciate the constructive cooperation and confidently look forward to the next phase in the process.
5 questions about the changes
We get a lot of questions from employees. You’ll find below the most important, more technical, questions and their answers.
1. In case my pension is converted into the new scheme, it will increase quite a bit. Why is this?
The Pensions Act entails a major change in the pension system in the Netherlands. These changes relate, among other things, to the tax framework that applies to pensions. By converting the accrued pensions (which is the default), different tax rules will apply to your pension and you will be able to take full advantage of this. This is because there is no longer a limit when it comes to the increase of your pension as a result of positive investment returns. Participants who can invest for a number of years and have a so-called long investment horizon will benefit the most from this. The longer the horizon, the greater the benefit for the (active) participants. In addition, the buffers of the pension fund will be shared with the participants in the case of conversion, which will increase this positive effect even further. This is a one-time opportunity that will potentially lead to a significantly higher expected pension. Although, in the new scheme, the investment risks will be taken on by the participants. It is expected that this will provide a significant benefit in almost all cases.
2. What about the calculations and when will employees be given insight into the calculations and considerations made by Shell NL and the COR?
Our projections are calculated by a third party, Ortec. Ortec is the market leader in the Netherlands and works as an independent party for Shell. Ortec is also working for the pension fund. Ortec has internal certification on its processes and also internal controls to monitor the quality of the data. In addition, Ortec’s calculations are checked by our own actuaries and the actuary of the works council. We are currently in close talks with the Central Works Council and are also discussing the results of the various calculations there.
Ultimately, the transition plan will explain how the social partners (Shell NL and the COR) view the transition. This explanation will also clarify how Shell NL and the COR interpret the open standards (such as a “balanced decision” or “disproportionately unfavourable”) referred to in the Future Pensions Act. We consider the interests of all groups of participants and take the different perspectives into account. For example, the expected consequences (both positive and negative) and the impact of a higher or lower funding ratio at the time of conversion must be considered. Ultimately, there must be a balanced transition. The considerations and choices will ultimately be included in the transition plan. This tran- sition plan is an appendix to the COR’s request for consent and is also made public to all participants.
3. What assumptions are used for the calculations?
To make the calculations, Ortec has developed special software that is used for many pension funds in the Netherlands and also for us. In this software, 2,000 scenarios are projected based on economic scenario sets prescribed by the Dutch Central Bank. Different assumptions apply to each scenario, so there isn’t such a thing as basic assumption. However, we can say that on average in the long term, a return of 5.6% on equities, 2.0% on bonds and 2.1% inflation is assumed. The 2,000 scenarios are also based on so-called stress scenarios: what if things go very badly, but also what if things go very well. An example of such a stress scenario is stagflation, in which there are negative stock returns in combination with high inflation for a longer period of time. The economic projections to determine the pension outcomes are made for the full expected life span of the participants. Scenarios in which participants live longer or shorter are not considered separately.
4. How do the experts view DNB’s scenarios? What if things get worse?
Every company and pension fund will have to work with these scenario sets. In addition to the most likely scenarios, these sets also contain very extreme scenarios. This involves a lot of work and although the scenarios will not cover everything, these calculations do provide a good overview of what can be expected. These sets also take into account extreme situations that are projected in the future. Due to political pressure, DNB’s scenarios contain many more very unreal situations than was previously the case. In this sense, the scenarios are seen as pessimistic rather than optimistic. The Government wants us to provide insight into these scenarios. Despite the fact that these are extreme and in all likelihood will not happen, everyone will also see these scenarios on their pension overview.
We understand that it is important that all interests are properly taken into account, even in a situation in which things suddenly take a turn for the worse. That’s why we set the bar high and don’t want to enter at all costs. We only want to make a request for entry if it is clearly better for the participants. Not only in the expected scenario, but we want the participants to benefit in a large majority of the scenarios. In doing so, we also look specifically at the stress scenarios mentioned, in which things go much worse. We are looking at this together with the COR.
5. What does this transition mean for me?
During the information sessions, we showed personas to give you insight into the possible consequences of conversion or leaving behind the pensions. We will update these personas based on the latest figures. We will also add new personas and explain how to read these graphs.
With these examples, you can get a pretty good idea of how the changes will impact your pension. Unfortunately, precise details of the new pension expectations at the individual level are not yet available and will take some time. Through the pension fund, you will eventually receive an individual overview showing you exactly what the effect on your pension is. It is not yet clear exactly when this will happen, but it will probably only be possible around the time when the transition actually takes place, because all systems must also be set up for this and the situation at the time of the transition determines the actual outcomes. So, that could take a few more years.
New rules for your partner’s pension
New rules for your partner’s pension
As the new legislation is in place, we also know that the pension for your partner is changing. We call this pension the survivor’s pension. This is the pension that your dependents (partner and any children) will receive after your death.
In the new pension system the survivor’s pension will be arranged differently. The most important change is the way the survivor’s pension is calculated if you pass away before you retire. Currently, the level depends on the level of your own retirement pension. But this will change. In the new system, the level of the survivor’s pension is a fixed percentage of your salary, regardless of your age. Shell Netherlands and the COR are currently discussing the level the survivor’s pension should be in the new scheme.
It is good to know that as long as you work (and for a limited period thereafter) a survivor’s pension is automatically insured. If you leave employment, you have the opportunity to maintain the coverage for the survivor’s pension. This can be useful if you (temporarily) do not join another company (and accrue pension) after leaving Shell. Right now, you don’t have that option. Shell and the Works Council jointly decide the level of coverage in the new system.
When you retire, you can decide whether you want to arrange a survivor’s pension as well as a pension for yourself. Employees who participate in the SNPS-scheme, already have this option. Would you like to know more about your current survivor’s pension? Use the pension planner on Shellpensioen.nl