NETHERLANDS - The Dutch pension fund of Anglo-Dutch oil giant Shell has seen its funding ratio plummet 160% to 85% in less than a year.
Shell announced the bad news in a letter to its members yesterday, revealing the cover ratio at the end of November stood at 85%, and the value of its investments had dropped by 40% since the beginning of this year.
The fund had already contacted the regulator DNB about its funding position of 105% in October as Dutch regulations stipulate the cover ratio of a pension fund must be at least 105%, and any shortfall must be repaired within three years.
Shell's Dutch fund, whose assets are managed by the Shell Asset Management Company (SAMco), invests heavily in equities, with around 70% of its assets allocated to the class.
The fund said its investments are spread globally, though on the basis of higher growth expectations it has a higher than average allocation to emerging markets.
As a consequence of the drop, Shell has decided the discounts on certain contributions will expire from next year.
Dutch media reported pension giant PFZW, the second-largest Dutch pension fund, had also dropped below 105%, and had a cover ratio of 96% at the end of November.
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