Funding ratio SSPF

The Pension Fund must ensure that the pension undertakings given by the employer can be paid both now and in the future. The funding ratio - the associated benchmark - reflects the relationship between the liabilities of the Pension Fund and its respective assets. With a funding ratio of 100%, the Pension Fund has in principle sufficient resources to fulfil the pension obligations in the long term.

The (actual) funding ratio is a snapshot: it shows the financial situation at one moment. Policy decisions, such as granting indexation, should be based on the policy funding ratio, which is the average funding ratio over the past 12 months.

The table below shows the funding ratio as well as the policy funding ratio of the past few years.

 (amounts expressed in millions of Euros)  end 2018  end 2017  end 2016
 Assets  27,357  28,149  27,336
 Provision Pension Liabilities (PPL)  22,680  21,814  22,394
 Funding ratio  122.4%  129.0%  122.1%
 Policy funding ratio  128.0%  129.3%  115.9%

As of December 31, 2019 the funding ratio of Stichting Shell Pensioenfonds (SSPF) amounted to 120.2%, resulting in a policy funding ratio of 118.8%. The graph shows the development of both ratios over the past year.

Explanatory notes about graph
The funding ratio shows whether the Pension Fund has sufficient funds to pay all pensions accrued to date, now and in the future. The policy funding ratio is the average funding ratio over the past 12 months.

Pension funds must maintain buffers for the general risks run by a pension fund. The minimum buffer is 5%. If the minimum funding ratio required of 105% (red line) is not met, this constitutes a funding shortfall. In addition to that, a pension fund must also maintain an ample buffer for investment risks (green line). If this statutory funding ratio is not met, this constitutes a reserves shortfall. The statutory funding ratio for the Pension Fund at the end of the second quarter of 2019 is 120%.

If the buffer requirements are not met, the Pension Fund has to submit a recovery plan to the supervisor (DNB). In the plan the Pension Fund explains which measures it will take to have sufficient buffers again within a defined period of time.