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Is Your Pension In Safe Hands With Shell?

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Screen Shot 2015-09-19 at 19.53.08By Lisa Smith: 24 Sept 2015

If you have a pension with oil giant Shell and are worried about what may happen to your retirement savings if you lose your job you need to take specialist financial advice.

Many Shell workers have built up significant retirement savings as high-earners in a well-paying industry.

The company runs the Shell Overseas Contributory Pension Fund – but a key point to remember is the scheme is not an HM Revenue & Customs (HMRC) registered pension.

Unlike the Shell scheme, a Qualifying Recognised Overseas Pension Scheme (QROPS) is a registered pension and operates under a framework of rules administered by HM Revenue & Customs (HMRC). 

If you have savings in the Shell scheme, you may find a QROPS is a place to keep better personal control of retirement savings.

Black hole

In May, Shell was one of 16 blue-chip companies that announced a pension black hole of more than £10 billion. Shell was top of the list with a deficit of £54 billion.

The slump in the price of oil is gripping the industry and is likely to impact oil company finances until at least 2020, according to the Organisation of Oil Exporting Countries (OPEC).

The report also suggests oil prices will not bounce back to the pre-slump price of £70 a barrel until between 2030 and 2040.

With such a long window, any oil worker around 40 years old now expecting to retire at 55 years old under the Shell pension scheme should consider taking specialist advice about whether to keep their pension money with Shell or to take tighter personal control with a QROPS sooner rather than later.

No one has a crystal ball that will tell them how the Shell fund will perform over the next decade.

Specialist pension advice

However, if the company built such a huge deficit in the good times, it’s hard to say what will happen now gushing profits are turning into a dribble and where that £54 billion will come from to put the fund back into the black.

QROPS are an option for Shell pension savers to consider because they offer flexible investments and tax benefits to British expats or overseas workers who have money in the Shell scheme.

Oil and gas workers are renowned for their country-hopping contracts, and some QROPS financial centres will let them keep their pension in one place as they move around the world.

When the time comes to consider retirement, the QROPS can still remain in situ regardless of where a retirement saver settles outside the UK.

Nevertheless, a specialist IFA and QROPS Adviser with the support of cross-border tax experts is vital to make sure any tax liabilities are minimised. 


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