Royal Dutch Shell Plc  .com Rotating Header Image

THE WALL STREET JOURNAL: Shell pension plan mulls a move with hedge funds

February 26, 2008

Royal Dutch Shell PLC’s main U.K. pension plan, one of the biggest in the country, is considering a first investment in hedge funds after tax-policy fears were allayed by Revenue & Customs, the U.K.’s central tax authority.

The fund with £13 billion, or about $25 billion, in assets, recently sought clarification from Revenue & Customs.

“Such clearance has only recently been obtained, and the trustees will be looking at whether we make a small investment in hedge funds as part of a portfolio diversification exercise,” Rupert Cox, new chairman of the pension plan’s investment committee, told a members’ meeting last month.

It is rare for U.K. pension plans to put money into hedge funds due to high hedge-fund fees and issues surrounding transparency. Last year, only 31 of 493 plans surveyed by investment consultancy Mercer invested in hedge funds.

In general, a registered pension fund isn’t charged tax on income it receives from investments. But if it undertakes any trading activities, the pension plan is liable for the tax.

“Most activities undertaken by pension schemes are investment rather than trading,” a spokesman for Revenue & Customs said. “Hedge funds are normally established outside the U.K. and undertake a variety of activities, which will usually amount to trading.”

“The tax treatment of an investor depends upon the structure of the hedge fund and whether for tax purposes it is transparent or opaque,” the spokesman explained. “If the particular fund is transparent, the pension scheme is likely to receive trading income, which will be taxable, but if it is opaque, the income is likely to be investment income.

John Hastings, a partner at investment consultants Hymans Robertson, and Debbie Anthony, a tax partner at accountant Deloitte & Touche, said the trustees might have been worried about whether a commitment to hedge funds was regarded as a tax-exempt investment activity.

The Shell plan has named Clive Mather as trustee chairman. A former chairman of Shell U.K. and chief executive of Shell Canada, Mr. Mather will take over May 15. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

0 Comments on “THE WALL STREET JOURNAL: Shell pension plan mulls a move with hedge funds”

Leave a Comment

%d bloggers like this: