My Letter to the Chair of the “Shell Contributory Pension Fund” Board

 

29th October 2023

 

Tim Morrison

Chair of the Trustee Board

Shell Pensions Trust Ltd

Shell Centre
York Road
LONDON SE1 7NA

 

Dear Mr Morrison

 

Pensions and “The Source”

I am in receipt of the latest issue of “The Source” for which many thanks. It does, however, raise as many questions as it answers not least in your own “message”. In this you say that “we… benefit from continuing robust support from Shell. The pensions promises made to members in their working lives are supported by this.” I wish to contest this most strongly. But first let me comment on the fact that this statement reinforces the reality that “Shell” is a separate entity from the “Shell Contributory Pension Fund” which is indeed legally and morally the case.

The separateness of the SCPF management has been weakened in recent times. Sadly, I see no evidence that the Trustee Board fought on behalf of members to ensure that our 2023 Pensions increase matched inflation – in fact the reverse seems to be the case. It would not be putting it too strongly to say that you and the Board meekly kowtowed to the Company’s wishes. Whether the increasing control that the Company has over the Board is a reason for this I can only speculate but the gradual disappearance of independent elected Member Nominated Trustees and their replacement by Company selected apparatchiks is evidence that this is the case.

 

The statement “The Pensions promises made to members” reminds us that there were indeed once-upon-a-time promises of “robust support”. But, regrettably, in 2022 and 2023, these promises have, for the first time in recent memory, not been met. The promise I received as an employee was made explicit in the “Your Pension” booklet (above) I received in 1995, some years before I retired. This booklet stated (page 14) that “The SCPF provides a high degree of protection to pensions against inflation, so that the real value of your pension is maintained”. In 2023 to honour this promise my pensions would have had to increase by 13.4% rather than the 7% I actually received.

Pages 12 and 13 of the “The Source” tell us that there are 26,394 SCPF members in receipt of pensions and that in 2022 Benefits paid amounted to £549m. This means that the average Shell pension last year was approximately £20,000 allowing for the fact that some pensioners have much lower-than-average pensions because of short service and that you include commutation lump sums and death benefits in the figure. But based on £20k the 2023 annual increase should have been £2680 if the real value of the average pension was to be maintained as promised. In fact, it was £1400 meaning that the average pensioner has suffered an annual lost of £1280 in real terms. This is a clear and culpable breach of promise.

Under the heading “Pension Increases and Inflation” you duck the issue that the company had the discretion to match RPI rather than restrict the increase to the Trust Deed minimum. Whilst the Trust Deed does “mandate” the minimum increase the Company can, of course, add to this to bring the increase up to the level of the RPI – as has happened a number of times in the past. There is in your “message” no apology for the impoverisation of the Pensioner consequential on the company’s decision and, it seems, the Trustee Board’s failure to challenge it. Instead, you indulge in an irrelevant statement about the “unreliability” of RPI as an index. You must know that the whole subject of Price indices is a contentious and debateable one and that it is entirely a matter of conjecture which is the better or worse measure for any subset of the population. No index is wholly reliable, certainly not as a measure of Pensioner cost of living. The fact is that the SCPF is formally linked to the RPI and that your references to CPIH are disingenuous and irrelevant. I am surprised that the SCPF is indulging in this misleading sham.

You will now be aware that in The Netherlands the Stichting Shell Pensioenfonds (SSPF) has increased the pensions of Dutch Shell Pensioners by a total of 12.1% matching inflation. They were not obliged to do this but exercised discretion in the light of high Dutch inflation – an inflation which was coincidentally close to that in the UK. Quite how Shell plc can justify matching inflation for Dutch Pensioners and falling well short in the UK is beyond me. I assume that the Trustee has been aware of this anomaly – has it been raised with the Company?

Finally, I find it regrettable that “The Source” reports on the Pension Fund as if it was solely a Financial entity. And some of the decision-making seems to emanate from this presumption. Of course, the financial health of the Fund is important to us all but for 26,000 Fund members in receipt of pensions being a member of the fund is as much a social matter as it is a financial one – just as in our days of employment there was more to being a Shell employee/stakeholder than the monthly pay cheque. All the Shell pensioners I know – quite a few of them (!) – take pride in our status and our continued links with our once employer. And many of us feel let down.

I apologise for the strong tone of my letter – there is nothing personal! But there has been a mean failure of judgment by those in the decision-making loop. I hope that you can find a way to put it right.

Yours sincerely

 

 

 Patrick S Briggs