Q: How is my pension affected if I go part time?
A: Pension accrues on the basis of your Pensionable Service and your Final Pensionable Salary. For many Fund members, assuming their contractual arrangements remain the same throughout their Pensionable Service; it's simply a case of the pension being calculated as one 54th or one 60th of Final Pensionable Salary for each year of Pensionable Service, depending on the Section that applies to you.
However, if different contractual hours have applied during your Pensionable Service, the calculation is based on the full-time equivalent Final Pensionable Salary but service is pro-rated for periods of lesser or greater hours.
For example, an employee who has been a member of the Pre-2009 Section since the end of 1995 and whose service has been full time since that date, changes his or her contractual hours at the end of 2010 to work 3 days a week. His or her full time salary was £40,000 a year. The employee subsequently leaves Company service in 2015. The five years working at 3 days a week is pro-rated to 3 years’ service.
The calculation of that employee’s pension would be as follows:
1995 - 2010: 1/54 x 15 years x £40,000 = £11,111
2011 - 2015: 1/54 x 3 years x £40,000 = £ 2,222
Total Pension payable at Normal Pension Date = £13,333 a year
Q: I understand that members do not pay pension contributions on reaching 36 years’ pensionable service. Does my pension grow once I have attained 36 years’ pensionable service?
A: Yes. Although SCPF member contributions for Pre-2009 Section members cease after 36 years’ Pensionable Service, the pension still continues to accrue at the rate of one 54th of your Pensionable Salary a year (and part year) of service. SCPF member contributions for Post-2009 Section members continue after 36 years’ Pensionable Service and the pension continues to accrue at the rate of one 60th of your Pensionable Salary a year (and part year) of service.
Q: What do I do if I want to take my pension early?
A: You may take your pension on or after the age of 55 and before Pension Age if you leave Company service. You must have at least two years’ Pensionable Service or have transferred benefits in.
You have to resign from the Company (giving at least your contractual notice) and notify the Pensions Administration Team that you want to take your pension straight away. The Pensions Administration Team will then send you the relevant forms to complete in order to set up the pension. An early retirement factor will be applied for each year you retire before Pension Age and this factor is subject to periodic review.
Q: What does ‘AVC’ stand for?
A: Additional Voluntary Contributions. These are additional pension contributions that you can make voluntarily. The Additional Voluntary Contributions Arrangement Explanatory Booklet gives full details of the AVC Arrangement.
Q: If I take my pension at Pension Age but continue to work, can I still pay into AVCs?
A: No. The SCPF AVC arrangement is only available to active members of the SCPF and not those taking pension.
Q: If I go on an expatriate assignment do I have to leave the SCPF?
A: No. When you go on an expatriate assignment you will become a deferred member of the SCPF in the section that applies to you (Pre-2009 or Post-2009 Section, depending on when you joined the SCPF). If you return to work in the UK and have been in continuous Pensionable Service in the SOCPF while you were overseas, then you will be able to rejoin the section of the SCPF that you were in immediately prior to transferring.
The Inter-Fund Linking Rules factsheet (factsheet will be available shortly) gives full details of how the two funds are designed to complement each other.
Q: When will I receive the annual pension benefit statement?
A: The annual Pension Benefit Statements are usually available in June. The Pensions Administration Team will send benefit statements to Active Members at their home address.
Q: Who is my nominated beneficiary for Death in Service Lump Sum?
A: Your Death in Service Nomination Form is held on your personal file, so you should contact the HR service desk (email: HR-Services@shell.com) who should be able to check the details for you. In order to ensure your wishes are up to date, you can complete a form which will replace any previous nominations.
Q: Can I attend a pre-retirement course?
A: The Company offers pre-retirement webinars to employees leaving with an immediate pension and employees approaching Normal Pension Date. You can reserve your place at a webinar on the online booking site.
Q: How is my pension increased from my date of leaving to the date I take my pension?
A: Your deferred pension is revalued from your date of leaving until you take your pension.
Before GMP age (60 for women/65 for men), your pension, including GMP, increases by the movement in the RPI up to 7% (5% for Post-2009 Section members) each year.
After GMP age (60 for women/65 for men), any pension in excess of the GMP increases by the movement in the RPI up to 7% (5% for Post-2009 Section members) each year.
From GMP age (60 for women/65 for men) the GMP element increases at a statutory rate, set by the Government.
Q: My pension isn’t always credited to my account on the 1st of the month, why is this?
A: Your pension is due to be paid on the first working day of the month. As your pension is paid in advance, if the 1st falls at a weekend or on a bank holiday, it will be paid on the next working day. For example, if the 1st of October was a Saturday, your pension would not be credited until Monday 3rd. This has always been the case and is not a change in practice.
We would recommend that you bear this in mind when arranging standing orders or direct debits from the account into which your pension is paid.
Q: Will my pension be paid early before Christmas or a bank holiday?
A: No. It will always be paid on the first working day of the month.
Q: Is my pension reduced when I get my State Pension?
A: Your pension is not reduced at GMP age (60 for women/65 for men), but the way pension increases are calculated changes. More information on this is given on the ‘Guaranteed Minimum Pension’ factsheet.
Q: Why don’t I get a Payment Advice slip each month?
A: Pension Payment Advice slips are only sent to you when the net payment to your bank account changes by £1 or more. You will be sent one in April each year and also for the month of May as this is the first payment made in the new tax year. If you don’t receive one at any other time, you can assume that your payment is within £1 of the previous month.
Q: Can you send me a duplicate P60?
A: If you require the information contained in the P60 for completion of a tax return, you can also find the relevant figures on your April Pay Advice. HMRC may require you to produce your P60s, so it is important that you keep them in a safe place. Should you mislay a P60 we have sent you, we can provide the information in a letter but we cannot guarantee to provide this to you in time to meet Fiscal Year deadlines if you do not request this in good time.
Q: Why has my tax code changed?
A: We cannot tell you why because HM Revenue & Customs (HMRC) does not share that information with us. Your Personal Allowances (and therefore your tax code which reflects these) are calculated by HMRC.
As the make-up of your Personal Allowances includes personal data (e.g. other sources of income, investment income etc), HMRC is not permitted to share this information with us. When your tax code changes, HMRC writes to you with a break-down of how your code has been calculated. However, they only send us your final coding without the background information. Therefore, if you wish to query your coding, you must contact HMRCdirect. For more information you can visit the HMRC website or call the taxes helpline on 0300 200 3300.
Q: How much pension will my qualifying spouse receive if I die?
A: A qualifying spouse is entitled to a pension on the death of a member, from the first day of the following month. A qualifying spouse is the legal spouse or civil partner at the date of death. The amount paid will generally not be less than 60% of your pension at Pension Age before taking any tax free cash. However the spouse’s pension on the death of a total incapacity pensioner before pension age is based on a notional pension and not your actual pension.
For further details please see the SCPF Explanatory Booklet. If you wish to receive an estimate of the pension please contact the Pensions Administration Team.
About the SCPF
Why use a trust?
The advantages of setting the SCPF up under trust are threefold:
- The SCPF assets are kept completely separate from those of the Company.
- To enable the SCPF to qualify for valuable tax reliefs on contributions, investment income and benefits.
- To confer legal rights to third-party beneficiaries e.g. spouses and dependants of SCPF members who have died.
How does the SCPF work?
The SCPF is a Final Salary Scheme (a type of Defined Benefit arrangement). This means that your pension is based on your Pensionable Service and Final Pensionable Salary at the date you draw your benefits, leave or die (whichever is the earliest), and your Accrual Rate.
How are my contributions taken into account?
In a Defined Benefit Scheme, such as the SCPF, pension benefits are defined by reference to salary and service, not on the contributions or performance of the underlying investments. The Company bears the risk of uncertain investment returns and pays the ‘balance of cost’. The cost to you as a member is much lower than the actual cost of providing the scheme benefits, the burden of cost being borne by the Company.
A pension arrangement where benefits are based on the value of contributions (the contributions paid and the investment gains or losses on those contributions) is known as a Defined Contribution Scheme (also sometimes known as a ‘money purchase’ arrangement). In this case, the member bears the risk of uncertain investment returns. The Shell Additional Voluntary Contribution (AVC) arrangement is a Defined Contribution arrangement.
How are the contributions invested?
The Trustee is required to prepare and maintain a Statement of Investment Principles (SIP), which sets out the principles governing decisions about the SCPF’s investments. When preparing the SIP, the Trustee must obtain advice from the Trustee’s independent investment adviser. The Company must also be consulted. The SIP is available on request from the Pensions Administration Team.
What types of investment are there?
The Trustee determines the investment strategy and how the SCPF’s investments will be allocated between the different asset classes (known as the strategic asset allocation). The main asset classes are equities, bonds, property and cash. The SCPF also invests in some more complex types of asset such as private equity and hedge funds.
The actual asset allocation may differ from the strategic asset allocation until any revised investment strategy has been implemented. A change of investment strategy cannot be implemented all at once, as it would mean selling and buying a large amount of assets at one time and not necessarily at the most favourable time to do so. Therefore, the agreed strategy is approached more gradually. Further information about the SCPF’s investment strategy can be found in The SCPF Source and SCPF Annual Report of the Trustee and Financial Statements (the Accounts).
Who invests the assets?
The Investment Manager appointed by the Trustee is Shell Asset Management Company B.V. (SAMCo). The Investment Manager invests the SCPF assets in accordance with the investment strategy and guidelines set out by the Trustee. These are set out in detail in the Statement of Investment Principles (SIP).
What is the investment adviser’s role?
The independent Investment Adviser appointed by the Trustee is Aon Hewitt. The Investment Adviser liaises with the Investment Manager and provides investment advice to the Trustee. The Investment Adviser helps the Trustee to monitor investment performance and the performance of the Investment Manager.
How do I find out about investment performance?
Full details are given in the Trustees Annual Report and Accounts, and a more summarised account is given in the SCPF Source.
I have heard of responsible investment or ownership – what is that?
Responsible ownership (also known as responsible investment) takes into account non-financial factors such as environmental, social and governance factors when making investment decisions. The aim is to achieve long-term sustainable investment returns for members. The Statement of Investment Principles (SIP) contains a summary of the Trustee's Policy on Responsible Ownership. Details of the Trustee's voting and engagement activities, as executed by Hermes EOS, the Trustee's chosen service provider, are shown in the Annual Voting and Engagement Report.