02 October 2007
Royal Dutch Shell has temporarily ceased contributing into its
pension scheme.
The "pension holiday" is a sign that the fund, one of the biggest
UK pension schemes, has a healthy funding position and is in
surplus (i.e. the scheme assets exceed the liabilities).
Pension breaks were popular in the 1990s when schemes appeared
to be well-funded. However factors such as increasing life
expectancy, stock market performance, increasing legislation and
the loss of some tax breaks led to a dramatic tunaround in scheme
funding. Company pension scheme funding positions have been
improving after making headline news in the first part of the
decade.
Regulatory changes now make it more difficult to take pension
holidays unless there is a substantial surplus in a scheme.
A Shell spokeswoman said: "We can confirm that the Shell UK
pension fund has agreed to a temporary reduction in company
contributions to zero. The fund remains in a very strong position
and is heavily in surplus." Contributions ceased from the 1st of
July.
The company did not say how much its main pension fund is in the
black but this is said to be around £2.9bn. Shell has one
most generously-funded schemes in the UK into which it paid
£67m last year.
