Daily Telegraph
13 December 2008
By Garry White
PLUNGING equity markets have seen the total assets of Royal Dutch Shell’s Dutch pension fund fall below the level required by Holland’s central bank, De Nederlandsche Bank (DNB).
The Dutch pension fund said that its coverage ratio had fallen to 85pc at the end of November. This followed a 40pc plunge in the value of the scheme’s investments over the course of 2008.
The coverage ratio is the proportion of assets held by the fund compared with its future liabilities. A coverage ratio of 100pc means the fund has sufficient assets to meet all of its future obligations.
The company’s UK pension scheme is not affected. A Shell spokesman said that the company’s contributory pension fund in the UK was managed separately and that it was fully funded.
The UK scheme has benefited from a move away from equities and into bonds – in 2007.
Last month, DNB postponed the deadline for pension funds with a coverage ratio that, because of the global turmoil, had fallen below 105pc to draw up plans on how they were to make up the difference. The funds now have until April 1, 2009, to table a recovery plan.
If Shell’s Dutch pension scheme’s coverage ratio drops below 105pc on a regular basis over a six-month period, Shell will have to make up the shortfall until the ratio again rises above the 105pc level.
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