Hello, I’m Willem Eikelboom. I’m an actuary at Willis Towers Watson. Willis Towers Watson is a global consulting firm. In the Netherlands we advise various corporations, including Shell, with regard to pensions. All companies in the Netherlands have to adjust their pension plan. This is necessary because the government is changing the pension regulations. Continuation of the current
pension scheme is not possible. Adjustment is required and I am supporting Shell NL with that.
During your employment with Shell, you accrued pension in one of Shell’s two pension schemes. Because of the new legislation, further accrual in the defined benefit scheme – which is administered by SSPF – is no longer possible. In the future, you will have to accrue pension in another pension scheme. The legislation offers the opportunity to convert the accrued pensions to the new premium scheme. That is attractive on the one hand because SSPF has a funding ratio of around 140%. That means there is 40% surplus in the pension fund, and you benefit from that when you convert it into the new scheme because your pension is likely to go up as a result. However, the downside is that after the conversion of your defined benefit pension, the pension will no longer be guaranteed. In case there is a deficit in the future, Shell will not make up for that deficit. So one of the questions for Shell is; do we convert the defined benefit pensions to the new pension scheme or not?
In answering the question if conversion would be the best option, several analyses are being made by Shell, I will not dwell on the of the content of these analyses. However, I can say something about the process. I have reviewed the analyses and I can confirm that they look accurate. If I look at the qualitative analyses, I believe they are complete. The various advantages and disadvantages are well identified. What I have also seen is that Shell also looks at these from the different perspectives of all the stakeholders. This also applies to the numerical analyses. To do that, Shell uses a mathematical model from Ortec and I believe that is a good model that is used by many companies and is consistent with what the market is doing and based on assumptions that I believe are realistic. So I’m very confident that Shell will make a good analysis of whether or not to convert the accrued pensions. I wish Shell success in making the right choice.
This video is developed for employees who are currently accruing pension in the SNPS-scheme. These employees joined Shell on or after 1 July 2013. In this video, we will explain how the new Future Pensions Act may affect your pension in the SNPS scheme.
The pension system in the Netherlands is going to change. What the new system should look like is described in the Future Pensions Act. We will have to change our pension schemes too. The changes are mainly about the future pension accrual. In this video, we explain what the changes could be for you.
In the future, everyone in the Netherlands will accrue a pension in a premium scheme. The SNPS scheme is such a premium scheme and we will keep this type of scheme for the future. Nevertheless, this scheme will change slightly as a result of the new law. To be more precise, the new law states that in principle every employee will get the same contribution rate instead of a contribution rate that increases as you get older, as is the case now.
But the new law also states that for current employees, the premium rate may continue to be based on the age of the employee. We are currently discussing these changes with the Central Works Council. In any case, what will not change is that we want to continue offering a good pension scheme. When we can share more details on this, we will let you know.
Imagine, all SSPF pensions together are one big jug of coffee. In the new system, we will no longer have 1 jug of coffee together that we drink from but we will each of us have our own individual cup of coffee.
But what happens to the coffee that is now in the jug? That coffee will be distributed to all participants. How do we do this? First, everyone will get a large mug instead of a cup. This is because there is more coffee in the jug than it takes to fill all the cups. When all the coffee is distributed then everyone gets much more coffee in the mug. After distributing, the coffee jug is empty. There is nothing left to divide. From now on you have your own mug of coffee. In one year there is a sip more in it because the investment returns are better than expected. And in the other year there’s a sip less in it because the returns are less. But we assume that in the end you have more coffee in your mug than you would have had in your cup before.
But what if we don’t distribute the coffee but leave it in the jug? Then the coffee stays in the jug. Your coffee stays there for you and is not poured into your cup until you retire. If you are already retired then nothing changes for you. Your coffee will still come from the same shared jug. And as long as there is enough coffee in the jug, you get some extra coffee from the jug every year for inflation, just as you do now. But the people who now work at Shell, they do get an additional cup.
That new cup represents the pension plan that will apply to all employees for the future.
The new cup only belongs to you because in the future in the new scheme you will accrue an individual pension. So in the future, your own coffee will be served in your own cup. The coffee in that new cup will fluctuate based on investment returns. In one year a little more, in the other a little less. But we think it will eventually lead to more coffee in your new cup.
In this video, we have explained in a simple and straightforward way how we can deal with the accrued SSPF pensions. Would you like to know more about this?
Then watch the detailed explanation video.
This video is a simple explanation of how we can deal with the accrued pension.The pension system in the Netherlands is going to change. What the new system should look like is described in the Future Pensions Act. We will have to change our pension plans too. The changes mainly concern the future pension accrual, but the pension you have already accrued in SSPF may also change. In this video we explain how we can deal with the pension you have already accrued. The new law states that all accrued pensions must be converted into the new scheme. Your pension in SSPF as well. This is also referred to in the new law as conversion. If the accrued pensions and the pensions of the pensioners are converted into the new scheme, all former employees and pensioners will receive a personal pension pot. This pension pot will be increased by a portion from the SSPF’s buffers. Buffers are the extra money the pension fund has set aside, on top of the money needed to pay the pensions. The buffers can be distributed in several ways; in the form of an increase in your pension, either once or spread out over several years, or in the form of new buffers. This way you are compensated for the fact that there are more risks involved. The law states that all pensions must be converted in the new scheme. In fact, we may only deviate from this if conversion in is disproportionately disadvantageous to a particular group. Are you already retired at the time of conversion? Then you have a choice; you can opt for a fixed or a variable pension. In other words, you can choose a pension that never changes in amount but does decrease in value due to inflation, or you can choose a pension payment that fluctuates with investment returns. This can lead to a higher pension, but in some cases also to a lower pension. To prevent your pension from going up and down too much, the pension fund ensures that the investment returns are spread out over a number of years so that your pension remains as stable as possible. If you haven’t yet retired, you will not have this choice until you retire.If the exception can be used pensions will not be converted, we will leave your accrued pension behind. Your pension remains in the current SSPF scheme. The current conditions also continue to apply to that accrued pension, including the Shell guarantees and the annual increase. But you will not get a share of the buffers. In this video we have explained how we can deal with the accrued pension. We also discuss this with the COR and the pension fund as part of the discussions about the future of our pension. VOEKS is also involved because they represent Shell’s pensioners and former employees. An important condition is that there must be a balanced decision for all parties concerned. As soon as we can share more on this topic you will hear from us.
My name is Thijs Terwindt and since November 1, 2022, I am the chairman of Shell’s Central Staff Council in the Netherlands. One of the biggest topics we are currently working on is the Future Pensions Act. The Central Staff Council has now formed a small team to start shaping the discussions with Shell The Netherlands on the new pension system and also the transitions towards it in the coming months.
Thijs, can you tell us a bit more about the process and timelines?
Yes, the process actually started a while ago. We have been preparing for the Future Pensions Act for about a year and a half. We already shared a lot of knowledge, Shell Netherlands and the COR, so that we would enter into the final phase of this consultation well prepared. Now, as of 30 May, the new law has also been passed in the Senate and we are really going to talk about what this new pension system is going to look like and how we are going to make the transition from the various funds to the new pension system. In this case, the Central Staff Council, has to take not only the interests of the employees into consideration, and of course of the employer, but also the interests of the pensioners and deferred members. This is a rather unique position because it involves a very large group of people with huge interests. But we are now going to put that process in place and that is certainly going to take until the end of the year, including the regular consultation and also the hearing rights of pensioners and deferred members. So that’s pretty much what the process looks like.
Good to hear.
And Thijs, how will the Central Staff Council ultimately look at this change?
Well, during the preparations we of course discussed what the interests of everyone are and how we should measure and assess the new system, the transition and the compensation. And what we find very important, and the law also prescribes this, is that it should be a balanced decision. So that means that people, or groups of people so to say, should not really be affected negatively. That will be quite a task to figure this out. Shell Netherlands will of course also provide overviews whereby we can gain insight into how this will work out for the various age groups. But that is one of the most important elements, that the ultimate decision is balanced for all participants.
Thijs, how do you feel about the cooperation at the moment?
The collaboration with Shell Netherlands is very good. But we also work together with VOEKS. That’s the association of pensioners and deferred members. They are actually not at a formal discussion partner for shaping the new pension system but they do have a right to be heard according to the law. However, we decided to involve them at an early stage. So we have already had several sessions together with Shell Netherlands and in the autumn they can formally comment on the proposal.
VP HR Netherlands
We aim for a balanced transition for all involved, namely current employees, retirees and other former employees. Shell Nederland is confident that, together with the COR, VOEKS and the Board of Trustees, it will bring this transition to a successful conclusion, focusing on a good pension plan for the future and the interests of the participants.
Chairman Central Works Council
‘We are striving for a good pension solution for the future in which all interests are carefully considered. Our goal is a purchasable pension after implementation and for the future’
Martin ter Brink
Chairman of the board SSPF and SNPS
‘One of the things the board will be reviewing in this process is whether the weighing of the interests of all groups has been balanced. You can trust that we take that task very seriously’
Pete Hein Deiters
Chairman VOEKS Hearings Committee
‘The VOEKS Hearing Rights Committee is committed to representing the interests of a large group of pensioners and former members (a total of 25,000) to the social partners Shell Netherlands and the COR. We also believe it is important that our constituents feel well informed and represented by us’