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Shell Pays Extra $2.9 Billion Into Pension Fund


By Fred Pals

July 23 (Bloomberg) — Royal Dutch Shell Plc, Europe’s largest oil company, contributed an additional 2 billion euros ($2.9 billion) to its pension fund after falling below a regulatory threshold.

The company, based in The Hague, paid the amount on May 25, according to the annual report of its pension fund published on its Web site today. Shell said in April that it would contribute about $5 billion into its pension funds this year, up from $1.6 billion in 2008.

Shell’s coverage ratio, the amount of assets relative to future benefit payments, fell to 80 percent in 2008 from 180 percent a year earlier. A ratio of 105 percent is the minimum needed to ensure that a fund can meet pension obligations, according to the Dutch Central Bank. It requires pension funds with coverage ratios below 105 percent to file a recovery plan.

Shell expects gearing, or the ratio of debt to equity, to triple by the end of the year as the company funds the industry’s biggest spending program. Shell filed a recovery plan to the Central Bank on March 31, explaining how it to plans to meet the required coverage ratio within a period of 15 years.

To contact the reporter responsible for this story: Fred Pals at [email protected]

Last Updated: July 23, 2009 09:38 EDT

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