Shell Retirement Payment Timeline

In this video, I walk through a hypothetical Shell retiree named John and map out when he might receive each of his payments after leaving Shell.

Full Transcript:

If I retire from Shell next year, what payments will I receive?

Many Shell retirees feel like they’re getting a myriad of payments when they exit Shell. Let’s walk through a hypothetical example, John, and go through his Shell retirement payment timeline.

Now, John is leaving Shell in February of next year, and John has over 20 years of service with Shell. John is also over 50 years old, so he is leaving with immediate pension eligibility. This is because John has greater than 70 points, including being over age 50 and leaving with a special severance.

Now let’s walk through John specific payments. Of course, in January of 2027, John is still working, so he’ll continue to get his base salary, and he will get his 2026 Group Employee Stock Purchase Program.

Now, February is John’s last month on payroll. So, in February, John will receive his last regular pay with his base salary. And as John is exiting, he will also receive any vested unused vacation as a lump sum payment. Now, John worked all of 2026 so John will get his 2026 bonus and that calculation will include John’s individual performance factor as well as the group business performance factor.

Now, because John is leaving with a special severance, John will also get his 2027 bonus. Now, his 2027 bonus will be prorated using the pay as you go system. Just looking at how many months he worked in that year. And of course, will then be subject to the most recent scorecard or in John’s case, 1.0, because we haven’t had a full quarter in 2027 yet.

Now that John is exited from Shell, let’s look at what happens in March. John will get his 2024 performance shares into his Fidelity account, just like he always has. Now, in addition to that, John will also receive his first severance payment. Since John is leaving with immediate pension eligibility, i.e. a Shell retiree, John’s severance payment is split into two equal payments. The first severance payment is paid out in March, and then the second severance payment will be paid out in 2028.

Now, of course, John and I have been talking a lot about his exit from Shell, and during this time we’ve been strategizing on a few other things. First and foremost, when somebody leaves Shell, they’re getting a lot of payments, but there’s a lot of inconsistency as their regular paycheck stops. So, one thing that we do is we’ll start John’s retirement paycheck, which is just a distribution from his portfolio every month. By having that retirement paycheck, this gives John a much more consistent feel, similar to when he’s working.

Now at the same time, since John is no longer on payroll, Shell will send John’s final compensation information over to Fidelity, and John can make his pension elections. Of course, the proper pension election will depend on John’s unique situation and which pensions John has had during his time at Shell.

And then the last thing that we’ll do is we’ll update his payments for his BRP or Benefit Restoration Plans. The BRP payments are payments that high earning professionals receive for Shell once they hit the IRS’s compensation limit in a given year.

If we fast forward to June, let’s talk about those BRP payments. So, the first BRP payment that John will receive is going to be his Provident Fund BRP or Provident Fund Benefit Restoration Plan payment.

So, in John’s case, he had years where his compensation of base plus bonus exceeded the IRS’s annual limit. And once it exceeded that limit, Shell then funded this PF-BRP account with the 10% employer contribution to his 401(k). In this case, it went to the BRP after it was no longer eligible for his 401(k). I encourage you to go back and watch my videos on the various BRP payments.

Now we’re going to assume that John had some years on the APF pension and some years on the 80-point pension. In that case, John will also receive BRP payments from his APF pension, and he will also receive a BRP payment from his 80-point pension. So, all in all, John will be receiving three lump sum BRP payments and these will get paid out generally later in June. So at least 90 days after leaving Shell.

Now with these BRP payments, Shell will notoriously under withhold on them. The PF-BRP account, John really doesn’t have any influence here, as Shell and Fidelity generally withhold a flat 22% for taxes. Now, of course, with all of these payments, John is in a top tax bracket, so 22% is not enough. With the pension BRP payments, we’ll work with Fidelity to fill out a form W-4 with Fidelity to help get closer to the proper withholding.

Now let’s fast forward to January of 2028. Since John had some time with Shell in 2027. In this case, two months, he may have contributed to GESPP. So, in January of 2028 is when his 2027 Group Employee Stock Purchase Plan pays out. So of course, this shows up in Fidelity in January for the contributions that he was able to make before exiting Shell in February.

Now in February, this is when John’s second severance payment pays out. So, the severance payment is the second half of his payment. So, severance payment two of two.

And now in March, John received his 2025 PSP. Now John gets his 2025 PSP because he is leaving with severance and also because he’s a retiree. However, because he didn’t work for most of 2027, that PSP will be prorated based on his active service during that time, so he’ll get about two thirds of the award.

And then if we fast forward to 2029, in March, John will get his 2026 PSP. And of course, this one will also be prorated, so he’ll get about one third of the award.

Now, as you can see, there is a lot going on with retirement and a lot of choices to make. So, I encourage you to talk to your financial professional about your unique situation. Also, stay tuned for my next video where I’ll start talking about how we turn some of these lump sums into that retirement paycheck.

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