When, after two strenuous Covid years and war braking out in Ukraine, an economic chain reaction was triggered which lead to soaring energy prices, a new inflation record, a substantial rise in interest rates and negative returns on almost all asset categories. Nevertheless, SSPF saw its funding ratio rise as a result of higher interest rates. This has made it possible for SSPF to increase pensions for pensioners and non-active members by 8%. Board member Oscar van Iersel and chairman Martin ten Brink look back on 2022.

Martin: "It was definitely a hectic year. And then there is always the temptation to immediately take action and start adjusting matters. We were quite right to do that this spring where our investments in Russia were concerned: we divested those. And we will not make any new investments there either. Given Russia's military brutality, this was the only rational course of action for the board."

Oscar: "This year we had a Ukrainian family in our home for a few months, who had fled the war. Very moving, when you witness that so closely."

Martin: "The war has not only had far-reaching consequences for citizens but it also had an impact on the entire global economy. As a board, we therefore asked ourselves what the negative returns on the stock market and an unprecedented high inflation meant for our investment policy. Our conclusion, in response to all the commotion, was: you don't want to change course too quickly. We’re focused on long term goals." 

Oscar: "We had some good talks about this with the people from our administrative office and our asset manager SAMCo. The starting point is and remains the value retention of the pensions of our participants. And this is where we now see the importance of the deliberate switch from targeting a nominal funding ratio to a real funding ratio, taking into account the expected increase in prices. Our target is a real funding ratio of just above 100%. This gives us sufficient capital to not only meet our pension obligations but also to continue to increase pensions in full in the future in line with expected price increases. So that pensioners maintain their purchasing power."   

Martin: "With inflation rising sharply, this year we had to find the right balance between wanting to maintain the value of pensions as much as possible and achieving our long-term goal of a real funding ratio of around 100%. On balance, this resulted in our decision to grant an 8% indexation at the end of 2022. This allows SSPF to maintain an excellent track record in terms of indexation. In recent years, we have adjusted the pensions of our participants in line with price increases and cuts have never been up for discussion."

Oscar: "The great thing is that participants have great confidence in their Shell pension, without necessarily knowing all the details and regulations. In part, this is thanks to the sponsorship guarantee from Shell."

Martin: "We should not break that trust. The decision that the social partners will have to make when the Future Pensions Act (Wtp) is introduced is clear: either fold into the new pension system or close the current scheme. We have set a detailed timetable for both scenarios. So that all parties involved know what role they will play in this process and when this input is relevant. In doing so, we aim for a balanced outcome for all participants, which includes pensioners, former participants and employees currently accruing pension; as well as for all generations." 

Oscar: "It is worth noting, by the way, that the topic of pensions has definitely become more of interest among stakeholders in recent years. Especially among younger colleagues. I think this is also due to all the news about the introduction of the new pension system and about the impact of macro-economic developments on the funding ratios and possible indexations of the pension funds. This increasing focus on pensions is also reflected in the surveys we conduct among our participants. Moreover, we also monitor how participants experience our communications, such as e-mails and our annual report. This year, they were rated even better than before."

Martin: "The developments around the new pension system seem like a marathon by now. It takes the time it takes... but I do think it is positive that the new pension legislation is also seriously being considered at political levels. The emphasis has geared more towards diligence and the quality of the plans and less towards rapid implementation. We also did a lot in 2022 to keep all stakeholders - such as the Accountability Body (VO), our Supervisory Board and Voeks (Association of Shell retirees) - well informed about the various aspects of the new pension law."

Oscar: "And luckily this year we were able to have meetings more often face-to-face! The past two years, constrained by Covid, we held these kinds of sessions mostly online. That did work in itself, but if you don't meet up that often and you have a lot to discuss, like in our sessions with the VO, virtual meetings just don't feel all that satisfying. In my experience, workshops and board meetings run more easily and effectively if you meet each other in person. What I like in this respect is the difference in backgrounds: many fellow board members have a financial background for example, while I work in HR."

Martin: "This further highlights our commitment to diversity and inclusion. Our board members have distinctly different backgrounds; this adds more colour to our conversations. Two women joined our board in early 2023, again with slightly different backgrounds from the current board members. This diversity will only benefit decision-making, and we are therefore aiming for sufficient diversity in all bodies of the fund. In the future, we want to avoid having to search for a suitable candidate for the Accountability Body (VO) or the Board each time a vacancy arises. Therefore we started 'TOPS' in 2022, which stands for Talent Development Pension Funds Shell. A learning and orientation programme for interested Shell employees and former employees, who may eventually want to join the VO or the board of one of our pension funds."

Oscar: "Last but not least, we also worked hard this year to rethink our ESG policy. Partly due to the recent introduction of the so-called 'SFDR' legislation. This Sustainable Finance Disclosure Regulation provides clear rules on how, as a pension fund, you document which criteria are met by your responsible investments. This topic is clearly an issue among our participants. They want a better world for future generations, combined with a value guaranteed pension."

Martin: "The ESG Forum is a working group in which a number of board members meet up with specialists from SAMCo and Shell Pensioenbureau Nederland to have a closer look at ESG policy. Next year we will have to deal with the second part of this SFDR legislation, only then we will know what we have to report on. Think of indicators for CO₂ emissions and gender diversity on the board, and how we as a fund account for any negative impact of our investments. This legislation will provide more transparency and allow for a more objective comparison. The sponsor has taken a clear position on energy transition, as a pension fund we also want to acknowledge our responsibility in this field. Thus, we are moving further and further along on our ESG journey."