A pension agreement was reached last year. What does this mean for Shell Pension participants?Jan Nijssen, Supervisory Board (SSPF), talking to Eveline Smeets, Head of Actuarial Affairs at Shell Pensioenbureau Nederland (SPN).
Jan: "For a long time, the Netherlands has been praised for its social pension system with many securities. I can understand that many people value that. Nevertheless, change is inevitable, as the current system will be unsustainable in the future. Especially because of the long-term low interest rates. We also live longer, which means we are able to enjoy our pensions for a longer period of time. A wonderful development, but it does come at a price.
Eveline: "This has put the Dutch pension system under pressure in recent years. Pensioners feel they are entitled to indexation (adjustment of pension payments to the increase of wages/costs of shopping etc.), while young people are like: 'you have so much already and now we are going to pay even higher premiums'. The new pension system attempts to address this issue without losing the good features of our current system."
Jan: "Although Shell Pension has two sound pension schemes, the sustainability of the Dutch pension system has been an item on the board agenda for many years."
Eveline: "Shell did not really see the absolute need for a new pension system, but we realise that generally speaking the system in the Netherlands needs to change. In recent years we have therefore tried to contribute to the development of a new system and represent the interests of Shell employees and former Shell employees by means of task groups.
Eveline: "Indeed. Although Minister Koolmees has just announced that the final import date will be postponed by one year. This gives pension funds until 1 January 2027 to switch to the new allocation rules. From that moment on it is no longer possible to accrue pension through the SSPF scheme. In principle, the pensions already accrued must be contributed to a new scheme. Unless we can demonstrate that this is financially unfavorable for the SSPF participants. In that case, the accrued amount may remain with SSPF. This is one of the things we have been committed to. ”
Jan: "Participants who started working for Shell after 1 July 2013 and accrue pension with SNPS will not be really bothered by the new pension system. The SNPS scheme is very similar to one of the two new contract types. In that respect, Shell Pension was well ahead of the pension agreement."
Eveline: "I believe that is something to be proud of. What will change is the premium contribution. In the current SNPS-arrangement you contribute more as you become older. That will no longer be the case. By contributing more at a younger age, your money has more time to grow. So in the end you need less for the same pension.
Jan: "Exactly what the pension agreement will entail for Shell employees will only become apparent once Shell and the Central Works Council (COR) have agreed on the details. As far as I'm concerned, it's important that Shell Pension (the administrator of the scheme) proactively contributes to rapid decision making."
Eveline: "As it stands, all pension funds have to implement a new pension scheme before 1 January 2027. In the very short term, nothing will change as yet. Decisions will be made in the coming years. Naturally, Shell Pension members will be kept well informed of all developments."
Jan: "I think it's very important that participants are provided with the right information and support concerning all the changes. It's good to see that Shell Pension has this well under way. As Supervisory Board, we are thoroughly informed about the communication efforts."
Eveline: "That is good to hear. In addition to employee sessions, we have also organised information sessions and Q&A sessions. We like to involve our participants in all developments and milestones. This approach and transparency is very much appreciated. But Jan, you are not going to be part of the introduction of the new pension legislation, as you are stepping down this summer. How do you look back on your years on the Supervisory Board?"
Jan: "I have greatly enjoyed my position. Since the Supervisory Board was formed, Shell Pension and SPN have always greatly appreciated our input. The fact that SSPF has succeeded in indexing its pensions up to and including 2020 is a great achievement, in my opinion. Because that's what ultimately counts for the participants."
Eveline: "Do you have any suggestions for us?
Jan: "I would hope that Shell Pension will continue to encourage a smooth and well-considered decision-making process towards the new pension system."