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Shell to pump $5bn into pension in ’09

Global Pensions

NETHERLANDS– Royal Dutch Shell plans to inject US$5bn into its pension fund in 2009, chief financial officer Peter Voser told analysts yesterday.

In a presentation about the firm’s first quarter returns, Voser said the increased contribution amount, up from $1.6bn in 2008, is driven by regulatory and other legal requirements.

Voser said: “The sharp decline in the world markets at the end of 2008 has left pension deficits for many companies, and Shell is not immune from that.” 

The firm estimated a total post-tax charge for its defined benefit pensions in 2009 of $1.3bn, including a $200m inflationary adjustment in the US. The balance of $1.1bn will be allocated across business segments and divided equally across all quarters. 

The announcement comes just two weeks after the firm outlined a pension recovery plan to the Dutch pension regulator that sees the scheme cutting its equity allocation and skipping indexation this year. 

The petrochemical company said the changes will allow the plan to return to minimum solvency of 105% by October 2011 and full solvency of 127% by 2024.

The scheme plans to reduce its equity weighting to 45% from 55%, boost fixed income to 35% from 30% and increase its allocation to alternative investments to 20% from 15%. 

Yesterday, Royal Dutch Shell reported first quarter earnings of  $3.3bn, down 57.7% from a year earlier.

GLOBAL PENSIONS ARTICLE

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