If you would like to see the Trust Deed and Regulations, the Statement of Funding Principles, the Actuarial Valuation Report or the Statement of Investment Principles (SIP), these are available on request from the Pensions Administration Team.
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An interview with Tim Morrison
In this short video, Tim talks about what has been keeping the Board busy and the areas they will be concentrating on in the coming years. Also look out for this year’s edition of the Source due out in November 2018, which includes the results of the recent Actuarial Valuation.
SCPF Chairman Welcome
Shell Chairman Welcome – Transcript
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I joined the board of the SCPF in 2014
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about a year after retiring.
I've done about 32 years with Shell
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six years as the Group Controller
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and then the last five I was the Finance Director
in the Downstream business.
As well as doing the SCPF work, I also Chair another
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small charity pension fund.
I do some finance work for a couple of charities,
and I'm a volunteer advisor on pensions.
And with this spread of activity I see a lot of pension issues
large and small, which I found helpful for the Shell pension work.
The Board deals with a whole range of issues
over the course of a year.
And I'll just pick out a couple.
But to put it in context let me start with the aim of the Board
which is beautifully simple.
It's to make sure that all pensions are paid on time
in full throughout the lifetime of the Fund.
The two issues I'll mention are the triennial valuation
and the Sponsor Covenant.
Every three years the fund is required by law
to carry out a valuation of its liabilities.
In other words the pensions we're going to pay in future.
We compare those against the assets we have
and if there's a gap the sponsor, Royal Dutch Shell,
is required to make additional contributions.
Estimating the liabilities requires making a range of assumptions
about things like inflation, life expectancy,
expected returns on assets.
We have a lot of support from our Actuary,
from our Investment Advisors and managers in doing this.
But the Board is responsible for the assumptions
in the end and the outcome.
We have sufficient assets to cover our liabilities.
But there's a valuable additional backstop
that's what's known as the Sponsor Covenant in pensions jargon.
This is the obligation of the sponsor in this case Royal Dutch Shell
to make up any deficit if, in fact, our funds aren't sufficient
to cover all the pension payments.
One of the roles of the Trustees is to keep an eye on
the Sponsor Covenant, and this means
keeping an eye on the financial strength of Royal Dutch Shell
both now and into the future.
So we look at the industry,
we look at Shell's strategy, we look at how it's doing,
and form a view as to how strong that covenant is.
We meet once a year with the UK Country Chair to discuss this
and we also have access to the enormous range of material
produced about Shell and about the wider industry
both by Shell and by external commentators.
The SCPF is a well funded scheme
we have sufficient assets to cover our liabilities
with quite a safety margin to spare.
We'll be doing an update on the current valuation exercise
in the next edition of The Source, our annual newsletter.
This comes out in November
so members should keep a look out for that.
The Source will also cover investment strategy.
Every three years, at the same time as we do the valuation,
we update our investment strategy and this is to make sure
we've got the right mix of assets in our portfolio.
The Board covers the full range of risks that the fund is exposed to.
These are things like inflation risk, return on assets,
how long our members live.
There are also risks like operational risks.
For example we might have problems with our I.T.
So we take care we've got all of those covered.
I'll say a little bit about climate change risk in a moment,
but I'd also like to mention one risk that affects members
rather than the Fund itself and that's pension scams
which have been much in the news.
If you're already taking your pension
or you've no intention of transferring to anyone else
then this doesn't affect you at all. You're not at risk.
But if you are thinking of transferring your pension
to another provider away from the SCPF you need to be
be very very careful that you choose a reputable and reliable provider.
There's increasing interest in how climate change
will affect major asset holders such as pension funds.
It's also generally reckoned that
the financial impacts of climate change will be material
but quite what form they take, and over what timescale
is still very uncertain.
How society responds to climate change
affects the Fund in two main areas.
First the strength of Royal Dutch Shell as our sponsor,
and second our investment strategy.
We are monitoring how all this affects the oil industry in general,
and Shell in particular.
We're actually more interested in the longer term,
say over 10, 20 plus years, than in the very short term
because the current covenant is so strong.
On the investment side a holding in fossil fuel businesses is very small
as a proportion of our total assets.
So what we're really interested in is the impact
on the global economy as a whole.
We're interested in how this translates
into the returns on different types of assets.
This is a very complex question and we'll be devoting
a lot of time to this over the years to come.
We're monitoring Brexit developments carefully
to make sure our current operations aren't disrupted
and that our arrangements with service providers
aren't disturbed in any way.
We don't think the funding level will be materially affected
by an orderly Brexit.
There's been a lot of worrying news about pension funds recently.
This mainly concerns poorly funded schemes with weak sponsors.
The SCPF is in a very different place.
There will be challenges, of course,
but we're well positioned to deal with them.
We have excellent advisors,
we have a well-informed and well experienced Board,
we're well funded,
and we have a strong sponsor in Royal Dutch Shell.
2017 MND Elections
The SCPF are looking for two pensioner members to join the Board of the Trustee Company. If you’re interested in becoming a Member Nominated Director (MND) read the “Introduction to Trusteeship” and the “Election Rules” available on the election website www.ersvotes.com/shellpensions before the nomination deadline of 31 August 2017. You can also view the short video on what it’s like to be an MND.