UK – The head of investment policy for Shell’s pension funds says the oil company’s pension funds are sticking with defined benefit pension schemes because it suits the organisation very well.
“DB has suited our organisation very well,” Alan Davies, head of pensions investment policy and advice at Shell International Ltd., told delegates at a conference in London. He said there was no pressure from within the company to move away from that policy. The decision to remain with DB schemes reflects the type of staff that Shell employs, he said.
Davies said Shell has tried to set out some centralised guidelines for its approximately 100 separate pension funds worldwide. Over a two-year period, Shell had followed the lead of similar international companies such as International Business Machines Corp. and Siemens AG in re-assessing the structure of their global pension funds.
He admitted Shell had learnt from IBM and Siemens. “Plagiarise as much as you can,” is his advice – a reference to following industry ‘best practice’.
He said the firm’s local funds - as far afield as the Far East, Latin America and Africa, as well as Europe and the US - had never spoken to each other before to exchange information. Despite the move to a more rationalised structure, the funds have to remain local because of local taxation and regulatory issues, he said.
Through a process of consolidation that mirrors the development of the parent company, the number of people at the corporate pensions centre has fallen from 40-50 to around four or five, Davies said.
As a whole, Davies said, Shell’s pension funds amount to a total 50 billion dollars, of which 80% of its assets are in three large funds. He said he saw no need to be wary about the future of equities as an asset class, because Shell views markets over the long term.