Royal Dutch Shell has announced that it is to close its DB scheme to new members.

The oil giant, the last company in the UK's FTSE 100 to still run a defined benefit (DB) scheme that is open to new members, will close the scheme to new hires in Britain from January 2013. A defined contribution (DC) scheme will be offered instead.

According to data held by Pension Funds Online the Shell Contributory Pension Fund (SCPF) has assets worth over £1.2bn and roughly 45.000 members, of which 30.000 currently receive a pension from the scheme. 

Shell's historic move comes after relatively good performance levels for the SCPF in 2011. Enjoying strong company backing and good returns, it is not clear what the motivations are behind the decision. On its website the oil giant states the change is needed in order to "reflect market trends in the UK".

A spokesperson for Shell added that the new DC plan "will be designed to ensure that the reward package in the UK for new hires remains strongly competitive. Further details will be made available as the design is progressed."

The scheme also says that current active members, deferred members and pensioners of the SCPF and the Shell Overseas Contributory Pension Fund (SOCPF) are not affected. "Active members of the SCPF and SOCPF will continue to accrue pension benefits within those plans on the same basis as now. The company has confirmed that its commitment to funding the SCPF and SOCPF remains unchanged."

Unite, the country's biggest union, has condemned the global oil giant Shell for its decision.

Len McCluskey, Unite's general secretary, said in a statement: "This is a disgraceful act, nothing less than greed on the part of one of the world's richest and most powerful corporations. Shell has no need whatsoever to close this scheme and in the process deny its employees the safe retirement they were promised they could save for.
 
"Shame on Shell - for where it leads, other corporates will follow," McCluskey added.

First Published 06.01.12

azeevalkink@wilmington.co.uk