The SSPF investment policy is recorded in outline in the Statement of investment principles (pdf). This policy is determined by the SSPF board. The Investment policy is elaborated in detail in the Actuarial and Business Memorandum (ABTN) and the Investment Plan.
The objective of the Board’s policy is to comply with the pension entitlements and pension rights, in which the aim is to retain the value of the existing and non-contributory pension entitlements. The benchmark that applies to this aim is the ‘derived price-index figure for all households’. The design of the pension scheme aims for simplicity and transparency and for independence from the developments in social security.
SSPF aims to achieve this objective with contributions that are both acceptable for SSPF as well as the sponsor.
Risk appetite and Investment Beliefs
The risk capacity of SSPF is mainly determined by the risk appetite of Shell Petroleum N.V. (SPNV) and its commitment in the event of a funding shortfall (phased) to deposit up to a coverage ratio of 105%. The Board, in determining its own risk appetite, has taken the Board’s target objectives for SSPF as starting point, weighing up the extent to which the Board is prepared to appeal to the SPNV commitment to deposit additional funds and also taking the Board’s formulated investment beliefs (SSPF Investment Beliefs) into consideration:
- Expertise combined with strong countervailing power leads to robust investment decisions.
- Responsible ownership promotes good governance and corporate social responsibility. Integration of ESG factors contributes positively to the risk/return profile.
- In order to generate returns, investment risk must be taken consciously, and unrewarded risks should be hedged where possible and practical.
- The Strategic Asset Allocation determines to a large extent the return potential and risk profile of the investment portfolio.
- Diversification improves the risk-return profile of the investment portfolio, explicitly taking into account the underlying sources of risk and return.
- A long-term investment horizon allows short-term risks, such as volatility and illiquidity, to be borne in order to target higher returns.
- Risk premiums vary over time and across markets, enabling considered implementation of dynamic policies to add value.
- Not all markets are always efficient, and this offers opportunities to add value through active management.
- Investment risks have multiple dimensions that need to be considered from different angles and perspectives.
- Additional costs are acceptable in order to generate additional returns and/or better manage risks.