On the go: The Shell Contributory Pension Fund fund has moved into surplus, while its sister scheme, the Shell Overseas Contributory Pension Fund, is close to reaching full funding, results from the two schemes’ latest triennial actuarial valuations show.
As of December 31 2020, the SCPF had a surplus of £479m, equating to a funding level of 103 per cent, the pension scheme reported.
The position is an improvement on the September 30 2020 funding level of 94 per cent, when the then £16.3bn scheme reported a shortfall of just over £1bn.
The scheme stated that this improvement in the funding level was due to a combination of increases in the value of its assets, changes to forecasts for inflation, interest rates and salary growth and the latest indications of member behaviour and longevity.
Following the outcome of the actuarial valuation, from July 2021 scheme sponsor Shell pledged to increase what it pays into its Contribution Reserve Account to 30 per cent of members’ pensionable salaries from 10 per cent.
The CRA, a separate ring-fenced account into which company contributions are paid when the SCPF is fully funded, held £489m in assets as at December 31 2020.
Shell agreed to pay a further £100m into the account this year and £50m in 2022.
While the SCPF was now in surplus, the funding level of the Shell Overseas Contributory Pension Fund hit 99 per cent as at December 31 2020.
As of September 30 2020, the funding level stood at 87 per cent, with the then £4.6bn scheme reporting a shortfall of £708m.
Ahead of finalising the actuarial valuation, from January 2021 Shell increased what it pays into the SOCPF to 55 per cent of members’ pensionable salaries from 30 per cent.
